Judeo-Christian Values Are Now Part of Doing Business In Canada

Judeo-Christian values is a term used since the 1950's to encompass the common ethical standards of Christianity and Judaism as it applies to life in general and in particular honest interactions between one person and another. 

The Supreme Court of Canada in the case of Bhasin v. Hrynew, 2014, dealt with the common law duty to perform contracts honestly. It imposed a Duty of Good Faith and a Duty of Honest Performance on contract law in Canada.

Accordingly, there is now an organizing principle of good faith that parties generally must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily.

This decision firmly establishes that the duty of good faith applies to all commercial contracts.

Canadian common law in relation to good faith performance of contracts was piecemeal, unsettled and unclear. The Supreme Court of Canada took two large steps forward in order to make the common law more coherent and more just. 

The first step was to acknowledge that good faith contractual performance is a general organizing principle of the common law of contract which underpins and informs the various rules in which the common law, in various situations and types of relationships, recognizes obligations of good faith contractual performance.

The second step was to recognize, as a further manifestation of this organizing principle of good faith, that there is a common law duty which applies to all contracts to act honestly in the performance of contractual obligations.

Taking these two steps will put in place a duty that is just and that accords with the reasonable expectations of commercial parties and that is sufficiently precise that it will enhance rather than detract from commercial certainty.

Under this new general duty of honesty in contractual performance, parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract.

This new duty of honest performance is a general doctrine of contract law that imposes as a contractual duty a minimum standard of honesty in contractual performance. It operates irrespective of the intentions of the parties.

What can be said is that the decision will have far-reaching implications for the Canadian common law of contracts including Matrimonial contracts. How the organizing principle will be applied in other, less obvious contexts remains to be seen. The court has essentially thrown the issue back to lower courts to work out the scope of this duty. It will be interesting to watch its development.

April 2015