In 2014 the Supreme Court pronounced that good faith contractual
performance is a general principle in the common law of contracts
and that there is a common law duty applicable to all contracts to
act honestly in the performance of obligations; Bhasin v. Hrynew,
2014 SCC 71.
Generally, Bhasin imposed a duty of honest
performance of contractual obligations.
In Bhasin, the duty of honest performance
included refraining from misleading or lying to the other party
with respect to the performance of the contract. That obligation
did not require that the parties be absolutely loyal to the other
party, to act as a fiduciary to the other party, nor did it impose
an obligation of full disclosure, and it did not mean that a party
would have to subvert its interests to that of the other party. The
result or goal of this new duty was to ensure that the other party
would have a chance to protect their interests if the contract did
not work out.
