The Supreme Court of Canada has made major changes to the law of
contract, of which all lawyers in Ontario ought to be aware.
In the recent decision, Bhasin v. Hrynew, 2014 SCC 71, the
Court recognized the principle of good faith governing all
contracts, while introducing a new duty of honest contractual
performance. These changes can summarized by the Court in a
[PRINCIPLE # 1: Good Faith is a General Organizing
The Court in Bhasin has now held that "good
faith" is in fact an "organizing principle".
That is, the concept of good faith is not a free-standing rule, but
a standard or philosophy that manifests itself in specific legal
[PRINCIPLE # 2: It is time to recognize a general duty
of honesty in contractual performance]
Under the duty of honest contractual performance, the Court held
that parties to a contract cannot lie or otherwise knowingly
mislead each other about matters directly linked to the performance
of the contract. In the words of the Court, "it is a
simple requirement not to lie of mislead the other party about
one's contractual performance".
[PRINCIPLE # 3: The duty of honest contractual
performance is not an implied term in the contract]
The duty of honest contractual performance is a general doctrine
of contract law that imposes a duty to act honestly, regardless of
the parties' intentions. It is not a duty that is implied
in a contract, but one that is imposed by the Courts.
[PRINCIPLE # 4: Parties cannot contract out of the duty
of honest contractual performance, but they can relax its
Parties are not entitled to exclude the duty of honest
contractual performance by stating so in a contract. However,
parties can relax the requirements of the duty so long as they
respect its core requirements. Any relaxation of the duty
needs to be in express and specific language.
The decision in Bhasin v. Hrynew has significant
implications for contract law across the country. While the
Supreme Court of Canada has already recognized an implied duty of
good faith in certain types of contracts, such as employment or
insurance, the Court's analysis has now changed. It is
very important for lawyers in Canada to understand the scope of
this new duty of honest contractual performance and its effect on
almost every practice area dealing with contracts.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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