Commercial Litigation
Competition and AntitrustOur Blog
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Since it was recognized a little over a decade ago in Bhasin v Hrynew, the contours of the organizing principle of good faith and the duty of honest performance in contract law have been gradually clarified by Canadian courts. Most recently, in Ocean Pacific Hotels Ltd v Lee, the British Columbia Court of Appeal considered whether the duty of good faith applied to pre-contractual conduct. In particular, the question in this case was whether an employer’s conduct before an employment agreement was finalized could be scrutinized under the duty of honest performance. Answering that question with a resounding no, the Court of Appeal’s decision provides critical insight into the evolving boundaries of good faith obligations in Canadian contract law.
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On December 2, 2024 a Delaware judge upheld her prior January 2024 ruling that Elon Musk’s compensation package, valued at $55.8 billion, had to be rescinded because it was approved in breach of the directors’ fiduciary duties (Tornetta v Musk). One month later, the same Delaware judge approved a settlement wherein Tesla’s directors agreed to return or forgo $919 million in compensation, which had been subject to a separate legal complaint by the Police and Fire Retirement System of the City of Detroit (Police & Fire Retirement System of the City of Detroit v Musk). The two cases were brought as derivative actions on behalf of shareholders of Tesla. The former action is now subject to an appeal brought by Tesla, but also an appeal by a separate group of Florida shareholders.
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On the Docket: Cases to Watch features a collection of decisions, identified by our expert Research & Advisory team, that are important to keep top of mind as they offer significant legal insights and shape the evolving landscape of Canadian law.
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Christopher Yung authored the blog Live and Let Dye – Litigation Maneuvers Prior to a Shareholder Vote, published on commerciallist.com.
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As important as corporations are to modern commerce, Courts have long struggled with how to make these fictional persons responsible for their actions when allegations against them require the Court to assess their state of mind. The problem is as old as the modern corporation, and can cause exasperation when corporations fail, leading Lord Chancellor Thurlow in the 18th century to remark that a corporation, being a fiction, “has neither a body to kick, nor soul to be damned.”
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Solomiya Zakharchuk authored the blog Out of Context, Out of Luck, published on commerciallist.com.
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Barring a very narrow set of circumstances, sophisticated parties with equal bargaining power are generally held to the terms of their agreement. 660 Sunningdale GP Inc v First Source Mortgage Corporation is a recent example where a commercial developer, 660 Sunningdale GP, was ordered to pay the entirety of the lender fee to the lender, First Source Mortgage Corporation, even though the loan did not proceed.
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Bonnie Greenaway and Drew Black co-authored the blog Shareholder Wars: A Receiver Is Not the Remedy, published on commerciallist.com.
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A power of sale is a very common mortgage remedy used by lenders where a borrower defaults under the applicable mortgage agreement. In light of the current interest rate environment, the power of sale process has anecdotally been exercised more frequently. Lenders (and borrowers), however, should keep in mind when such a right can be restrained.
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In the recent decision of Wyse Meter Solutions Inc v CARMA Corp, Justice Audrey P. Ramsay rejected an attempt by a former employer to obtain injunctive relief enforcing a non-competition clause against an employee who had been required, as a condition of employment, to purchase shares in the employer.
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