The good faith principle in Canadian contract law has been developing and the jurisprudence has become uncertain as to the extent that a covenant to negotiate in good faith may be legally enforceable. In the context of a “non-binding” letter of intent, a covenant to negotiate in good faith may create obligations that prevent a seller from invoking clear termination provisions. We will review the current state of the law on covenants to bargain in good faith and the practical dynamics of such a covenant, having regard to the relative ease of obtaining an interlocutory injunction to resist termination of the letter of intent and the relative difficulty of prevailing on a summary judgment motion for dismissal in the face of conflicting testimony as to the conduct of failed negotiations, which together make covenants to negotiate in good faith a potential trap for the unwary.
This program contains 1 hour of Substantive content
