Class 1 Introduction and the Civil Law Tradition Sept. 5 3
CLASS 3 Good Faith: The Concept of Good Faith
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- Good Faith: Baudouin –p.109-115
- Specific Examples of Good Faith: Baudouin –p.138-142
- Good Faith in Cooperation
CLASS 3 Good Faith: The Concept of Good FaithSept. 19 Art. 6, 7, 1375, 1379, 1401 (2), 1416, 1419, 2805 C.c.Q.
Good Faith: Baudouin –p.109-115There are three forms of good faith. The first two are more traditional forms and have to do with “la disposition d’esprit dans laquelle se trouve une personne lorsqu’elle agit.” Malicious intent Knowledge – “une personne est de mauvaise foi lorsqu’elle agit en sachant qu’elle le fait de facon illégale ou illégitime.” Normal acceptable behaviour – this is a wider and more objective standard. This is about the “éthique de comportement exigée en matière contractuelle.” there was no codal recognition of the obligation of good faith until 1994 (6,7, 1375) French doctrine says you don’t need to say it explicitly, it goes without saying because it is understood concept of abuse of right starts to change in the 1970’s in QC 1971 case of Fiorito is the starting point of change in the judiciary, but Beetz’s 1981 SCC decision in Soucisse is really where it all began The CCQ & B-J (109-115) For a long time, court only looked at if the contracting party used malice (intent of causing harm). With no malice, parties could do as they wished notion of absolute right – no abusive right at all. Courts then began to look at situations where there was no malice. The first case on this was decided in 1971: Fiorito. Courts confronted with situations where the behaviour in the argument of a contract was shocking, unacceptable to society. This obligation in contract to act in good faith is codified in 1375 CCQ: The parties shall conduct themselves in good faith both at the time the obligation is created and at the time it is performed or extinguished.” In the case of good faith in the negotiation of a contract, a violation of the rules of good faith at this stage can result in extra-contractual liability when no agreement is arrived at. This is important at the stage of advanced negotiations when the parties have begun to rely. No Quebec court has yet decided on this question but an obligation to bargain in good faith is known in labour law. “Ceci dit, il faut faire preuve de prudence dans la sanction d’une rupture de négociations: seule une conduite malicieuse ou clairement abusive qui entraîne des dommages devrait être sanctionnée.” Also, the negotiations should be at an advanced stage before these considerations quick in order to preserve the right to back out of discussions. Good Faith at the SCC & French Law Conditions for abuse of rights: The Good Faith test in [Houle] malice using a contractual right for a purpose other than what the parties had in mind when contracting asserting contractual right in an unreasonable manner (1457 CCQ test) Court made it clear that only conduct that is a marked departure from the generally accepted standards will be condemned – i.e. not socially acceptable with a clear deviation. Borderline cases should not make abuse of rights. The cases should be clear. After decades, good faith was recognized. French law had an influence but more at the beginning than the end (mentioned in the cases). Jurisprudence played important role – there was no article in the code. Court built from the bottom and added reasonableness to 1024 CCLC. From the time of codification, the law was clear on Good Faith – it was not dependent on jurisprudence. The law became certain and fixed as to where Good Faith was to be exercised. *Today, good faith is such a basic, fundamental principle that it is at the same level as (1) autonomy of the will and (2) public order. Specific Examples of Good Faith: Baudouin –p.138-142Good Faith in K of EmploymentThe duty of loyalty in a contract of employment has many manifestations: employee cannot be dishonest, ruin employer’s reputation, attack employer’s private life, cannot profit from confidential information, or exercise concurrent activities as his employer (i.e. compete with employer). This obligation may continue for a reasonable period after the contract of employment ends. The extent of the obligation of loyalty varies depending, most notably, on the responsibilities assumed by the employee and his important in the crucial/central activities of the enterprise. Good Faith in CooperationThe duty of cooperation is, in some ways more demanding than the other obligations of good faith since it “commande un comportement positif, plutôt qu’une simple abstention.” The existence of a duty of cooperation is based mainly on two factors: “la poursuite par les parties d’un but commun, montrant par là leur intention de collaborer la fréquence des rapports entre les parties.” B-J (138-142) Because of this, we often find this obligation in contracts “à l’exécution successive.” This obligation leaves room for each party to fulfill its individual goals but they cannot do so at the detriment of the other party. In some circumstances, this obligation requires that one party help the other even without acquiring an immediate gain from this action. One of the most well known correlates of duty to cooperate is the duty to disclose (l’obligation de renseignement). This usually exists in negotiation but can sometimes be found throughout the contract as in the case of Banque de Montréal v. Bail. The main types of contracts where the courts will find a duty to cooperate is in contracts of insurance where the insured has to cooperate with the insurer by declaring all risks. It is also found in the relationship between franchiser and franchisee (“existence d’une obligation de collaboration et d’assistance technique et commerciale”). It is up to the courts to determine the specific application and precise objective of this obligation is different contexts especially in contracts of successive execution or in the pursuit of common goals. Case Law & Downside of Abuse of Rights: Use of these principles means that we can rely less on the contract as written – interfering with sanctity of contract. Judges have power to modify the contract – dark side. Power of the judge as unwarranted intrusion in a contract created by the parties. Disturbance that the doctrine creates in the legitimate expectations of the parties. Exceptions to broad power to contract. Doctrine allows the judge to substitute his own notion of right and wrong to what the parties have decided is acceptable. Especially in the cases of negotiated contracts (the doctrine does not apply only to contracts of adhesion where one side does not determine the terms). Creates uncertainty. What is acceptable to one judge is unacceptable to another judge – discretion power to judges leads to differences in decisions especially around the marginal cases. Subjective assessment of fairness. The expansion of the doctrine of abuse of rights needed to be stopped somewhere so the courts are trying to find limits… The Law since these cases There is the standard case of dismissal like Gignac where Er has reasonable belief for dismissal. Even though this is later found wrong in law. And, further, the er proceeds in the usual way of dismissing an Ee. For example: Salary must be paid, Er must use discretion, etc. Gignac was dismissed like this. In these cases, the sole measure of damages is the salary for the period that the court determines the Ee should have had. There are cases where dismissal is objectionable so moral damages can be given on the basis of such abuse of rights. For example: Malice – vengeance, dismissal for sexual harassment Where there is NO REASON WHATSOEVER – no reasonable ground for a reasonable person to have dismissed. The burden is on the ee to show that the grounds the er used were bullshit. In Gignac, the Bank actually believed Gignac was incompetent. Dismissal with er having unnecessary and damaging method – hurts reputation of ee when no discretion is used. This is abuse of rights because you have the right to terminate but you are using it in unnecessary way by causing prejudice. The development of the doctrine of Abuse of Rights has reached a plateau. Upholding basic standards of behaviour. There aren’t abuses of rights everywhere. The mere breach of an implied obligation is not an abuse of rights (Provigo). Not every breach of contract is an abuse of rights. As stated in Houle there must be a clear departure from generally admitted standards. The SCC was careful. We should rephrase the Houle decision to say that there is no justification for judge’s interference unless what was done is a clear deviation from generally admitted standards. The abuse must be shocking. Directory: pubdocs -> files files -> International maritime conventions files -> Chapter 1: Property as rights, not thing files -> Insurance Law – May 4 files -> Contractual Obligations – Prof. Helge Dedek Introduction 1 files -> Constitutional Limits on Criminal Law 1 files -> Antonio Iacovelli Winter 2005 Advanced Criminal Law files -> Private International Law – Prof. Walsh Summer 2005 files -> Part I: conceptualizing and justifying ip space 3 files -> Part I – general 5 The Sources of Int’l Air Law 5 Q? 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