Duty of Good Faith Applied In Interpreting Termination Clause:

In Mohamed v Information Systems Architects (ISA)  ( 2017 ONSC 5708) Judge Perell was faced with a termination clause in an independent contractors’ agreement that included a provision that said ISA could terminate the fixed term agreement if ” ISA determines that it is in ISA’s best interest to replace the Consultant for any reason. ”

As the same clause listed other grounds for termination like substandard performance , cancellation of project and breach of the agreement, the Court held that this clause was not only vague and uncertain but to interpret it to mean that this gives an unfettered right on behalf of ISA to terminate the Consultant was contrary to the general doctrine of good faith as an operative principle of contract . ( Bhasin v Hrynew 2014 SCC 71). As this provision was held to be invalid, he was entitled to be paid out the balance of his fixed term.