New Contract Law, Honestly

The Supreme Court of Canada recognized a new principle of contract law this week in Bhasin v. Hrynew: a duty to act honestly.  Specifically, “…parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract.  This does not impose a duty of loyalty or of disclosure or require a party to forego advantages flowing from the contract; it is a simple requirement not to lie or mislead the other party about one’s contractual performance.”

Business clients are urged to keep this in mind at all stages of their contractual relationships, from negotiation, through fulfillment and enforcement.