September 16, 2025
The Supreme Court of Canada’s 2014 decision in Bhasin v. Hrynew fundamentally changed Canadian contract law by introducing the duty of honest performance—a general duty requiring parties to act honestly in the performance of contractual obligations. Since then, Ontario courts have steadily developed and applied this principle in a variety of contexts. Recent cases highlight how this duty continues to evolve and how Ontario courts are prepared to hold parties accountable for dishonest conduct, even if it doesn’t amount to a traditional breach of contract.
The duty of honest performance continues to shape contract law in Ontario. It serves as a reminder that while the letter of the contract is essential, the conduct of the parties in carrying out their obligations is equally important. Recent cases show that Ontario courts will not hesitate to hold parties accountable for dishonest behaviour—even when a contract appears to give them wide discretion.
What Is the Duty of Honest Performance?
The duty of honest performance is part of the broader organizing principle of good faith in contract law. It requires that parties not lie or knowingly mislead each other about matters directly linked to the performance of the contract. This duty is not something parties can exclude or contract out of—it applies to all contracts in Ontario and across Canada.
Key Recent Developments
- C.M. Callow Inc. v. Zollinger (2020 SCC 45)
This Supreme Court decision expanded on Bhasin by finding that actively misleading conduct can breach the duty of honest performance, even if no false statement is made. In this case, a group of condominium corporations terminated a contract but failed to correct the contractor’s mistaken belief that the contract would be renewed. The Court held that the condominium corporations knowingly misled the contractor and breached their duty, even though the contract allowed for termination without cause.
Takeaway: Parties must be careful not only about what they say, but also about what they omit, if their silence knowingly misleads the other side.
- Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District (2021 SCC 7)
Though this case originated in British Columbia, Ontario courts have relied on it to reaffirm the limits of the duty. Wastech clarified that while parties must exercise contractual discretion in good faith, the duty does not guarantee a minimum level of advantage or profit to the other party.
Takeaway: The duty of honest performance prevents dishonest conduct but does not prevent a party from acting in their own legitimate self-interest.
- Ontario Applications of Honest Performance Post-Wastech
Ontario courts have continued to apply the principles from Bhasin, Callow, and Wastech in specific contractual disputes, including:
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- Termination Clauses: Ensuring that terminations are not carried out dishonestly or in a way that misleads the other party.
- Employment Contracts: Courts are increasingly vigilant about employers’ honesty when terminating employees, especially regarding the reasons provided and severance discussions.
- Real Estate Transactions: Honest performance is being applied to cases involving disclosure obligations and negotiation conduct.
Practical Implications
For businesses and individuals entering into contracts in Ontario:
- Be transparent. If your actions or omissions might mislead the other party, you could be at risk.
- Document communications. Clear, honest, written exchanges can protect you if a dispute arises.
- Understand good faith obligations. You can pursue your own interests but must perform contractual duties honestly and in good faith.
How Weilers LLP can help you
If you’re unsure about how this duty may impact your contracts or business practices, consulting with a Weilers LLP corporate lawyer can help you navigate these evolving obligations. If you are involved in a dispute where the duty of honest performance may be important, our litigation team can help.
Give us a call. We may be the right lawyers for you.