The Supreme Court of Canada in 2020 highlighted the need for being honest in dealing with contractual relations. No more being Canadian and saying nothing when asked directly if a contract will be terminated, nope, you need to take a sip of your Tim’s and boldly answer yes, if you know that to be the case.
In Bhatnagar v. Cresco Labs Inc., 2023 ONCA 401 the Plaintiff asked the Court for Damages when the defendants clearly had not been honest in stating in whether a closing date would be met. It is important to note that the Judge no finding the defendants had intentionally misled the plaintiffs about the closing date. It was the defendants’ failure to update important information about the closing date that it had previously provided which led to the finding that the defendants had breached their duty of honest performance.
The interesting clarification in this decision is that the plaintiff did not receive damages as it didn’t prove that the breach of the duty of honesty in contractual relations actually led to a loss.
While this decision still requires you to tell the truth in contractual relations, if your dishonesty doesn’t lead to damages, the Court isn’t going to award damages against you ….. yet.
Honesty is always the best policy and silence implying a position that is not true will come back to bite you in the wallet – at least for legal fees.
Inga B. Andriessen, Senior Lawyer