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The duty to exercise any contractual discretion in good faith

With contractual discretion comes the responsibility to use it reasonably.

Quick Question: I have a Canadian commercial contract that says “I may at my sole discretion do X”, so that means I have absolute discretion to use that right however I wish, correct?

Quick Answer: No. A recent decision of the Supreme Court of Canada (linked below) has established there is duty to exercise any contractual discretion in good faith and “reasonably” and in a “manner consistent with the purposes for which it was granted in the contract”. Therefore, the assessment of what is reasonable is highly context specific and the contract should be reviewed as a whole to determine what the parties intended and the purpose for which the discretion was granted before you act on such discretion.

Learn more about the decision in Wastech Services Ltd. v. Greater Vancouver, 2021 SCC here: https://lnkd.in/e56T3P9