Protecting Reasonable Expectations: Mapping the Trajectory of the Law

Abstract

The doctrine of reasonable expectations has evolved into a powerful tool for judicial and regulatory activism and, as a result, a bellwether for the trajectory of the law. The concept has broadened — both in scope and in the range of potential claimants. Yet it has been used to achieve goals that are remarkably consistent across different areas of law: first, to require powerful actors to treat stakeholders fairly, which entails treating them with honesty and avoiding actions that would impose unnecessary or disproportionate costs on them; second, to uphold the integrity of legal or regulatory regimes by remedying actions that frustrate their purpose by allowing an actor to avoid the obligations associated with these regimes. The doctrine is particularly relevant to contemporary society, where legislative processes have become constrained by, among other things, the short-term incentives that inform and motivate political processes. As the tension between public expectations and legislative responsiveness becomes more severe, a growing role has emerged for our courts and independent regulatory bodies to use reasonable expectations to forge new legal pathways. This article outlines what appears to be an accelerating trend — first by reflecting on the nature of “reasonable expectations” and then exploring how the doctrine has been and is likely to be applied.

Keywords: reasonable expectations, regulation, corporate conduct, long-termism

JEL Classification: G20, G30, K20