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Brian Madigan LL.B., Broker

RE/MAX West Realty Inc.,
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 

Phone: 416-745-2300

Cell: 647-404-8150 
Toll Free: 1-888-507-0817

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Good Faith and Honesty now Required for Contracts (Supreme Court of Canada)

November 24, 2014 - Updated: November 24, 2014


The Supreme Court of Canada just changed every contract in Canada. Now, all contracts include:


1) an obligation of good faith contractual performance, and

2) a duty to act honestly in the performance of contractual obligations.


So, good faith and honesty are in, and absolute, sole, unfettered discretion is out. No one is allowed to act unreasonably or capriciously, anymore.


Parties no matter what they say in a contract, cannot eliminate these two NEW common law principles.


Last month, that was not the law, but it is now.


This will have an effect on real estate listing agreements, buyer representation agreements, agreements of purchase and sale (including the ancillary documents, being waivers, amendments and fulfillments). It will also effect every lease, every mortgage, every franchise agreement and every building contract.


It will probably take at least 20 years for lower Courts to interpret what the Supreme Court of Canada just did, when it changed 5,000 years of contract law.


This will be of dramatic consequence to the real estate industry. Real estate practitioners would be well-advised to seek the assistance of a lawyer in areas of uncertainty. Solicitors draft contracts, and we will likely need some new precedents. Barristers take matters to Court, and there should now be some interesting opportunities.


Note: see Bhasin v. Hrynew (SCC 13 November 2014)


Brian Madigan LL.B., Broker



Tagged with: contracts supreme court of canada bhasin good faith honesty new law change common law
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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

Phone: 416-745-2300

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