You've Got to Have (Good) Faith: Good Faith's Trajectory in Anglo- Canadian Contract Law Post-Wastech and the Potential for a Duty to Renegotiate

ABSTRACT

[...]it illustrates how Article 1195 of the Code civil des français (CCF) and Articles 6.2.1-6.2.3 of the UNIDROIT Principles of International Commercial Contracts (UNIDROIT) address contractual hardship. [...]it establishes that Anglo-Canadian contract law is moving in a direction that prioritizes reasonable contracting behaviour and approves of the courts' powers to provide relief where contracts are unfair. Anglo-Canadian contract law sets a very high threshold for frustration,9 and does not accept that hardship constitutes a frustrating event (however, scholars have argued that the two are not mutually exclusive).10 Anglo-Canadian contract law has embraced Lord Radcliffe's approach of the "radical change" in the nature of the obligation, as enunciated in Davis Contractors Ltd v Fareham Urban District Council.11 In Davis, a contractor was hired to build 78 houses for £92,424 over the course of 8 months.12 Due to labor shortages, the contract took 22 months to complete and the costs to build each house rose to £115, 233.13 The court denied the contractor's claim for frustration, seeing that the turn of events was not unforeseeable.14 Lord Radcliffe stated the test as follows The frustration doctrine must find an appropriate balance between the inclination to hold people to their bargains, notwithstanding the fact that the bargain has become unexpectedly less attractive to them and, on the other hand, an inclination to relieve the parties from their bargains where a refusal to do so appears unjust and may result in the unjust enrichment of the other party.18 Given these tensions, judges have been cautious and confined the doctrine of frustration to rare circumstances.19 This narrow approach-which bears similarities to Québec's20-supports the argument that there is a gap in the law pertaining to changed circumstances, and that it would be appropriate to develop good faith to assist parties facing hardship arising from extenuating circumstances (such as the Covid-19 pandemic).