Duty of Honest Performance in Contract Law (video)

Also read: Duty of Honest Performance in Contract Law

The Supreme Court of Canada expanded the duty of honest performance in contract law in a recent December 2020 decision. I’m Madeline Harden, a lawyer at Labour Rights Law Office, your go-to virtual law firm. And after the video, if you have any questions about your employment contract, give us a call for a free, we provde 30-minute consultation over the telephone or over web-conference. And our contact information is below.

The duty of honest performance means that parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract.

This case involved two parties who entered into a contract. The contract was for two years and one party wanted to terminate the contract but it continued in the contract while knowing it was going to eventually terminated the contract and it mislead the other parties into thinking that the contract was secure. When it did come time to terminated the contract the other party sued for breach of contract. This case ened up before the Supreme Court of Canada who agreed that the first paries had knowingly mislead the other parties into thinking the contract was secure.

Your employment relationship is governed by an employment contract. And even if it’s not a written employment contract, you are subject to the terms and conditions of an oral or verbal employment contract. Every employee is covered by an employment contract whether written or verbal.

The Supreme Court of Canada confirmed that contractual rights must be exercised honestly and with good faith, and this obligation includes when the employer exercises its right to terminate your employment. Or other rights under your employment contract. Dishonestly includes conduct that knowingly misleads another party or which fails to correct a false impression created by the conduct of the parties. The Supreme Court of Canada confirmed that dishonestly does not only includes lies, but also half-truths, omissions and sometimes even silence.

So for your employment, this means that the employer has a positive obligation to actively correct a misunderstanding you may have about your employment. It cannot “knowingly mislead” you or create a false impression about the terms and conditions of your employment. If you have a mistaken belief about your employment contract, your employer may have a duty to correct such a misapprehension.

Labour Rights Law will be keeping a close eye on how the lower courts interpret this decision. In the meantime, if you have been wrongfully dismissed and believe that the employer has not acted with honesty or good faith, we would be pleased to speak with you.