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Contracts - Discretionary Terms. Bowen v. JC Clark Ltd.
In Bowen v. JC Clark Ltd. (Ont CA, 2022) the Court of Appeal considered a contractual term that made consideration of a bonus discretionary to the employer:(i) Entitlement to the discretionary bonus under paragraph 5
[35] I do not accept the respondent’s position that the discretionary nature of the bonus provision in paragraph 5 of the employment agreements means that the employer was entirely unconstrained as to how that discretion was exercised. Where an employment agreement provides for a discretionary bonus, there is an implied term that the discretion will be exercised in a fair and reasonable manner: see Bain v. UBS, 2016 ONSC 5362, at paras. 85-90, aff’d 2018 ONCA 190, 46 C.C.E.L. (4th) 50; Greenberg v. Meffert (1985), 1985 CanLII 1975 (ON CA), 18 D.L.R. (4th) 548 (Ont. C.A.), at pp. 555-56, leave to appeal refused, [1985] 2 S.C.R. ix; and Chann v. RBC Dominion Securities Inc. (2004), 2004 CanLII 66310 (ON SC), 34 C.C.E.L. (3d) 244 (Ont. S.C.), at para. 48.
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