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CANADIANLAWYERMAG.COM/INHOUSE MAY 2015
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Q U I Z Q U I Z By Jeff Cowan, partner; Kim Lawton, associate; and Hayley Peglar, associate, WeirFoulds LLP
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ABOUT THIS QUIZ.
1
Is there a general duty of good faith in all contractual dealings?
(A) Yes
(B) No
(C) Maybe
2
Can parties contract out of the duty of honest contractual performance?
(A) Yes
(B) No
(C) Maybe
3
Is there an obligation to put the interests of a counter-party to a contract fi rst? For example,
a large grocery store chain has a contract with a small produce supplier for the purchase of
fruits and vegetables. Is there any requirement for the grocery store to put the interests
of the small produce supplier fi rst when considering a change to the quantity of its order?
(A) Yes
(B) No
(C) Maybe
4
A landlord has a contract with a property management company for the management of its
leased properties. The contract automatically renews, subject to a non-renewal clause. The
landlord intended to renew the contract and communicated this to the property management
company. However, one month later, the landlord changed its mind and exercised the
non-renewal clause. Is this a breach of the duty of honest contractual performance?
(A) Yes
(B) No
(C) Maybe
5
Can a contracting party protect itself by limiting communications with the counter-party
in the course of performing the contract?
(A) Yes
(B) No
(C) Maybe
Good faith and honest
contractual performance
In November 2014, the Supreme Court
of Canada released a signifi cant decision
in
Bhasin v. Hrynew, which recognized
a new general duty of honesty in
contractual performance. The court
introduced "two incremental steps."
First, it acknowledged an "organizing
principle" of good faith in contract
law. Second, it recognized a new
common law duty to act honestly
in the performance of contractual
obligations. In light of the potentially
wide-ranging effects of this decision,
parties will need to consider their
performance obligations and behaviour.
Let's explore the decision in greater
depth by testing your knowledge of its
possible implications.
