Honesty Is The Best Policy

In the 2014 Bhasin v Hrynew case, the Supreme Court of Canada clarified the law and recognized a legal principle that imposes general duties of good faith and honest performance on all parties to a contract.² These duties exist in addition to any obligations set out in the express terms of an agreement and cannot be contracted out of. This article provides an overview of the basic principles of the duty of honest performance and sets out examples of how it can apply in the context of due diligence performed as part of a land deal.

THE DUTY OF GOOD FAITH

Lawyers often refer to "the duty of good faith" to describe the principles set out by the Supreme Court in Bhasin. However, in the Bhasin decision the Supreme Court actu- ally set out two separate concepts: a general organizing principle of good faith, which underlays specific situations where good faith duties were already recognized by the law, and a narrower duty of honest performance of contrac-