Commercially Reasonable

Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60 (CanLII)

[79] As we will explain below, contractual interpretation also requires courts to consider the principle of commercial reasonableness and efficacy. Contracts ought therefore to be interpreted “in accordance with sound commercial principles and good business sense” (Scanlon v. Castlepoint Development Corp. (1992), 1992 CanLII 7745 (ON CA), 11 O.R. (3d) 744, at p. 770). As Lord Diplock explained in Antaios Compania Naviera S.A. v. Salen Rederierna A.B., [1985] 1 A.C. 191 (H.L.), at p. 201, “if detailed semantic and syntactical analysis of a word in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense”. The principle that requires contracts to be read in a commercially reasonable and efficient manner is therefore an important interpretive aid in construing contractual terms.

[80] Ultimately, contractual interpretation involves the application of various tools — including consideration of the factual matrix and the principle of commercial reasonableness — in order to properly understand the meaning of the words used by the parties to express their agreement.