Deceptive Silence And Good Faith Contractual Performance

On December 18, 2020, the Supreme Court of Canada released its decision in C.M. Callow Inc. v Zollinger et al, 2020 SCC 45 ("Callow"). In this decision, the Supreme Court sheds some further light on the duty of good faith contractual performance by examining what constitutes "active deception" and knowingly misleading another party about contractual performance.

Bhasin and the Duty of Good Faith

In 2014, the Supreme Court of Canada released its seminal decision in Bhasin v Hrynew, 2014 SCC 71. Through that decision, the Supreme Court articulated a duty of good faith as an "organizing principle", meaning that in carrying out a contract, a contracting party should have "appropriate regard to the legitimate contractual interests of the contracting partner" and "not seek to undermine those interests in bad faith". The Supreme Court also recognized a duty of honest contractual performance, as a separate freestanding duty.