RECENT DEVELOPMENTS IN THE LAW OF GOOD FAITH
Some 12 years after the Supreme Court of Canada’s landmark decision in Bhasin v. Hrynew (2014), the principle of good faith has become a ubiquitous and critical feature of contracts throughout common law Canada.
The doctrine has matured, although some uncertainty persists. In this article we offer a summary of insights and practical guidance, including what to keep in mind when pleading, defending and advising upon, for this evolving legal doctrine.
The evolution of good faith since Bhasin
In Bhasin, the Supreme Court of Canada recognised good faith as a general organising principle of contract law, along with a mandatory duty of honest performance.
Since 2014, the court has developed the principle and the doctrines that manifest it, including by elevating the duty to exercise contractual discretion in good faith to a mandatory requirement (Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District (2021)), and by extending the duty of honest performance to cases where a party knowingly fails to correct misapprehensions that the counterparty draws from their active conduct (C.M. Callow Inc. v. Zollinger (2020)).
Together, these Supreme Court of Canada decisions have reframed contractual performance as a domain in which conduct, and not only the four corners of the contract, can give rise to liability.
While it is difficult to identify definitive trends, there is undoubtedly a steady flow of disputes where alleged misconduct is framed as a breach of good faith. Even where a damages claim ultimately rests on an established breach of contract, good faith frequently forms part of the litigation narrative, providing a vehicle through which the conduct underlying the dispute can be brought to bear on the analysis.
Jul-Sep 2026 issue
McCarthy Tétrault LLP