Underneath the Golden Boy - Robson Hall Faculty of Law

324 Underneath the Golden Boy
expanded the scope of the duty of good faith and fair dealing. In 530888 Ontario
Ltd. v. Sobeys Inc., 95 the Ontario Superior Court of Justice stated that parties to
a contract are expected to fulfill their contractual obligations honestly and in
good faith. Furthermore, the court asserted that commercial relationships are
not immune from the imposition of fiduciary duties. Justice Lax stated:
The concept of power dependency is fact driven. Fiduciary duties will be imposed in
appropriate circumstances to govern the manner in which discretion is exercised.
This decision is of particular importance in that it distinguishes Jirna Ltd. v.
Mister Donut of Canada Ltd., 96 a landmark Supreme Court of Canada ruling
stating that the franchise relationship does not give rise to fiduciary duties. The
current state of the common law is that a franchisor may be a fiduciary but only
where the facts so warrant.
3. PEI
Prince Edward Island boasts the newest franchise legislation in Canada, with the
Franchises Act 97 coming into force on 1 July 2006. Like the Ontario Act and
Alberta Act, the PEI Act has enacted relationship provisions enforcing the duty
of fair dealing and the right of franchisees to associate and organize. 98 PEI has
followed Ontario’s fair dealing provisions closely. However, section 3(1) of the
PEI Act extends the duty of fair dealing by adding “including the exercise of a
right under the agreement.” Regardless of any differences, for all provinces, the
duty of fair dealing is a mutual obligation between franchisors and franchisees,
whereas the right to associate is designated to protect the interests of
franchisees. 99 Furthermore, PEI struck the phrase “in the performance or
enforcement of the franchise agreement” from Ontario’s right of action section
under fair dealing, so that the section reads:
A party to the franchise agreement has a right of action for damages against another party
to the franchise agreement who breaches the duty of fair dealing. 100
In contrast to the procedure followed in enacting fair dealing provisions, PEI
adopted Ontario’s association provision verbatim.
95
[2001] CarswellOnt 240.
96
[1975] 1 S.C.R. 2.
97
R.S.P.E.I. 1988, Cap. F14.1.
98
Lawrence Weinberg and Jayne Westlake, “Canada’s East Coast Provinces Pursue Interest in
Franchise Law,” online: Franchise UPDATE Archive, Past Articles
.
99
Ibid.
100
R.S.P.E.I. 1988, Cap. F-14.1, s. 3(2).