What are the obligations of good faith in the performance of a contract?
Ontario, Canada
The following excerpt is from 1698496 Ontario Limited et. al. v Zoberi et.al., 2015 ONSC 6565 (CanLII):
Canadian contract law recognizes a difference between a duty of good faith in the performance of a contract and a fiduciary duty. This difference is explained by Cromwell J. in Bhasin v. Hrynew (2014 SCC 71 (CanLII)) at paragraph 65, where he states: The organizing principle of good faith exemplifies the notion that, in carrying out his or her own performance of the contract, a contracting party should have appropriate regard to the legitimate contractual interests of the contracting partner. While “appropriate regard” for the other party’s interests will vary depending on the context of the contractual relationship, it does not require acting to serve those interests in all cases. It merely requires that a party not seek to undermine those interests in bad faith. This general principle has strong conceptual differences from the much higher obligations of a fiduciary. Unlike fiduciary duties, good faith performance does not engage duties of loyalty to the other contracting party or a duty to put the interests of the other contracting party first.
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