A recent Supreme Court of Canada decision has expanded a party’s responsibility of its duty of honest performance of a contract. A party can be liable to another party if it knowingly misleads that party and does not disclose information that could be pertinent to the contract. For example, if Party B suffers damages as a result of a false impression created by Party A, Party A could be liable for a breach of its duty of honest performance. In the case at issue, Party A had a contract with Party B, and, despite communicating with Party B its satisfaction with the work, terminated the contract early in accordance with the terms of the contract. Party A’s fault was knowing it was going to terminate the contract months prior to actual termination, and despite that did not inform Party B, but rather creating a false impression that the contract would continue.
To learn more about the duty of honest performance, and what this recent decision might mean for you and your business, please contact a member of our team at HGA Law.