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Dec 21, 2020 · In Callow, the Supreme Court of Canada held that: Parties to a contract have a duty of honest performance, as the Court first recognized six years ago in Bhasin v. Hrynew. [2] This duty “applies to the performance of all contracts and, by extension, to all contractual obligations and rights”. [3] Further, parties are “not free to exclude ...
- Background
- The Decision
- Key Takeaways
The case involved a dispute between therespondent, a group of condominium corporations (“Baycrest”), and theappellant, C.M. Callow Inc. (“Callow”), regarding a two-year wintermaintenance contract (the “Contract”) and separate summer maintenancecontract, both executed in 2012.TheContract stipulated that Baycrest was entitled to terminate the Contrac...
With only one dissent,the Supreme Court set aside the decision of the Ontario Court of Appeal andfound that the duty to act honestly in performance of the contract precludedthe active deception by Baycrest by which it knowingly misled Callow intobelieving that the Contract would not be terminated. At the outset of its decision, the SupremeCourt rei...
The decision in Callow, and inparticular its expansion of the duty of honest performance to prohibithalf-truths, omissions, or silence, under certain circumstances, and not merelyovert dishonesty, will require parties to a contract to tread very carefullywhen engaging with counterparties when termination, contract renewal, or othermaterial matters,...
Nov 18, 2014 · Hrynew, 2014 CarswellAlta 2046 (S.C.C.) (Bhasin), released on November 13, 2014, the court has introduced a duty of honest performance applicable to all contracts and brought the Canadian common law into closer alliance with the civil law of Québec and the Uniform Commercial Code (UCC) in the USA. The ruling is significant in that it goes beyond the scope of the particular situations and ...
Oct 19, 2021 · Zollinger, 2020 SCC 45, the Supreme Court of Canada (SCC) expands on the scope of the duty of honest performance in contractual relationships, previously established by the SCC ruling in Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494. Our firm previously blogged about the Court of Appeal Ruling in this case. See the previous blog here.
The duty of honest performance is connected to the principle of good faith in contract law. Although the standard of utmost good faith, used in insurance law, is not required, there is already a standard of good faith imported into contracts of many areas of law due to statutes, such as in franchise, employment, and labour law.
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What is the duty of honesty in a contract?
In another recent decision of the SCC, Bhasin v Hrynew, 2014 SCC 71, the Court recognized a new common law contractual duty: the duty of honest performance.The duty requires that parties be honest with each other in relation to the performance of their contractual obligations and not lie or mislead the other party about one’s contractual performance.
