Recent Developments In The Canadian Law Of Contract

In 2014, the Supreme Court of Canada rendered two decisions relating to the law of contract. Parties doing business in Canada should be aware of these decisions because they have significantly changed how contracts are to be performed and how contracts are to be interpreted in Canada.

In terms of performance, the unanimous Bhasin v. Hrynew, 2014 SCC 71, decision identified good faith as an "organizing principle" of the law of contract and created a new duty of honest contractual performance into Canadian contract law.

The law before Bhasin, for most Canadian contracts, was that there was no general duty to perform contracts in good faith (except in narrow cases, for example, in contracts of insurance). As such, Bhasin represents an important change in how parties are expected by Canadian courts to perform their contractual duties.