Does Ontario law require contracting parties to act in good faith?

Ontario law recognizes a duty of honest performance in contracts. The Supreme Court of Canada established in Bhasin v Hrynew that parties must not lie to each other or knowingly mislead each other in performing their contractual obligations. This is a general organizing principle of contract law rather than a standalone cause of action.

Importantly, this does not mean parties must put the other side's interests first or disclose information voluntarily. The duty is one of honesty — not affirmative generosity or self-sacrifice. Parties negotiating at arm's length can still act in their own interests; they simply cannot lie or deceive in doing so.

Specific types of contracts carry broader good faith obligations. Franchise agreements under Ontario's Arthur Wishart Act have express good faith and fair dealing duties. Insurance contracts impose good faith obligations in how claims are handled. Employment law recognizes a duty of good faith in the manner of dismissal.

Whether conduct in a specific situation crosses the line from hard bargaining into dishonest performance — triggering a good faith claim — is a fact-specific analysis. If a party's conduct in performing a contract left you with the impression you were being deliberately misled, that is worth discussing with a litigation lawyer.