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Duties of Good Faith Versus Fiduciary Duties

Duties of Good Faith Versus Fiduciary Duties

September 5, 2023

By Brian Babcock

We have previously discussed the meaning of “fiduciary” and the duties that a fiduciary may owe to the beneficiary of that duty.

A fiduciary duty comes with several responsibilities, which may vary depending on the relationship. Because the law of fiduciary duties is still evolving, no single comprehensive list can claim to be complete or fully accurate.

Fiduciaries may include lawyers, trustees, key employees, agents or others, depending upon the circumstances.

At the core of fiduciary relationships is a duty of loyalty. It can be said that all other duties flow from the duty of loyalty.

Since 2014, Canadian courts have recognized a duty of  honest performance of contracts. The ambit of that duty is still being explored.


This contrasts and compares to the duty of good faith, which has long been known to exist in certain types of contracts, such as insurance or employment. Which leads to the question: what distinguishes a fiduciary duty from other duties of good faith?


This issue has not been decisively determined at the appeal court level. However, a recent Ontario Superior Court trial decision considered the question and decided that the difference is that a fiduciary duty includes the obligation to put the interests of the beneficiary ahead of the interests of the fiduciary if they conflict.

Good faith does not go that far- in a normal contract relationship, it is assumed that each side of the deal will look after their own interests, and as long as they are honest about that, there is no breach of contract. Good faith, however, does require giving consideration to the other side’s interests.

This approach to distinguishing the responsibilities that flow from a duty of good faith (or honest performance) from a fiduciary duty makes distinguishing the two concepts more vital. In the Troung case, the outcome turned on the difference. Insurers and insureds typically owe each other a duty of good faith but are not in a fiduciary relationship.

In addition to a different standard of what constitutes a breach of the duty, breaches of fiduciary duties may more easily attract a broader range of remedies, including disgorgement of gains or punitive damages, which are not traditionally available for a breach of contract.

So, knowing which sort of breach it is is important to what remedies you seek and your strategy.


We  can help you afford a breach of either duty in the first place by serving as your trusted advisors. If you are confronted by a breach from the other side, we are experienced and proficient at sorting out what remedies to seek and a strategic approach to getting there. If those are the sort of lawyers you need, give us a call and see if we are the right lawyers for you.