NSCL  Not So Common Law

June Presentation

Duty of Honesty in Contracts

In a series of recent decisions the Supreme Court of Canada has upended Canadian common law by articulating a new overarching principle of good faith performance within contract law which requires that contracting parties generally must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily.

In doing so the SCC has imposed a new duty of honesty in contractual performance that requires all contracting parties to act honestly toward each other in performing the contract. Wait. What?! Does this mean that there wasn’t a duty to act honestly in making and performing contracts before? That the law permitted contracting parties to lie or intentionally mislead each other regarding the performance of their contract?