Getting Around “Good Faith” in Ontario


The standard clauses for financing and inspection which say “absolute and unfettered discretion” are no longer the case. How do you get around that?


There is no obligation to “negotiate” in good faith, but once you have a contract, you are obligated to “perform” in good faith.

In the Bhasin case, the test went from subjective to objective. So, the way to get around Bhasin is to include a subjective test. That’s not the way that the OREA clause is worded, so in this case, there’s no free walk away.

So you would add the words:

“…in his sole and absolute discretion, to be determined in accordance with a subjective test….”.

That’s the bare minimum. You could add more information etc. for clarity, like:

“….notwithstanding that this agreement may simply constitute an option to purchase in favour of the Buyer….”.

Brian Madigan LL.B., Broker

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