Marco P. Falco discusses the duty of honest contractual
performance for HR professionals as part of the Torkin Manes
LegalPoint Video Series.
You may have heard of a recent decision of the Supreme Court of
Canada which has made major changes to the law of contracts.
The case is called Bhasin v. Hrynew, and it will have
significant implications for all contracts in Canada, including
employment agreements. HR professionals in Canada need to
understand its basic requirements.
In the Bhasin decision, the Supreme Court of Canada
created a new duty on the parties to a contract. The Court
named it "the duty of honest contractual
performance". This new duty can be simplified in a few
PRINCIPLE ONE: Parties to a contract must be honest with each
other in the performance of the contract.
While Canadian law has long held that parties to an employment
contract, for example, must act in good faith, the duty of honest
contractual performance imposes a specific requirement:
parties to a contract cannot lie to each other or otherwise
knowingly mislead each other about matters directly linked to the
PRINCIPLE TWO: The duty of honest contractual performance is
imposed on all contracts in Canada.
The duty of honest contractual performance is a duty imposed by
Canadian Courts of law on all contracts in Canada. It means
that in the case of employment agreements, there is a simple
requirement not to lie or mislead the other party during the course
of the contract itself.
PRINCIPLE THREE: Parties cannot contract out of the duty of
honest contractual performance.
Parties to an employment agreement cannot avoid the duty to
perform the contract honestly by including language in the
agreement that says the duty of honest contractual performance
simply does not apply. However, in certain circumstances,
which have yet to be determined, the contracting parties may be
able to relax the requirements of honest performance, so long as
any relaxation of that duty is made in express and specific
language in the contract.
You can see that the Court's decision in Bhasin
will have a major effect on the way employers and employees act
with one another over the course of the employment
relationship. While the duty of honest contractual
performance may well be a simple requirement not to lie or mislead
the other party to a contract, the case raises many complex
issues. HR Professionals in Canada need to understand the
Bhasin decision and its basic requirements.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).