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Contracts - Assignment. Quickie Convenience Stores Corp. v. Parkland Fuel Corporation
In Quickie Convenience Stores Corp. v. Parkland Fuel Corporation (Ont CA, 2020) the Court of Appeal considered whether a commercial contract which contained a consent for assignment provision, also carried with it the condition that the consent shall not be unreasonably withheld (as is the case by statute in commercial landlord and tenant situations):[40] The question then is whether an agreement that requires consent to be assigned carries with it an implicit understanding that consent to an assignment will not be withheld unreasonably. I agree with the appellant on this point. I conclude that a provision in a contract that requires one party to consent to the assignment of the contract by the other party, has implicit in it the requirement that the party, whose consent is necessary, will not withhold that consent for an improper or ulterior purpose. In my view, the imposition of a good faith obligation, on the decision whether or not to consent, is consistent with the approach to be taken to contracts generally, as enunciated in Bhasin.
[41] In Bhasin, Cromwell J. outlined the organizing principle of good faith that applies to all contracts. It requires that parties to a contract act honestly in the performance of their obligations. In that decision, Cromwell J. established certain duties that rest on parties to a contract. These include:(i) parties generally must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily; and
(ii) a contracting party should have appropriate regard to the legitimate contractual interests of the contracting partner: Bhasin, at paras. 63 and 65.
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