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Contract - Duty of Good Faith versus Fiduciary Duty. Spina v. Shoppers Drug Mart Inc.
In Spina v. Shoppers Drug Mart Inc. (Ont CA, 2024) the Ontario Court of Appeal considered class action franchise appeals (direct and cross) from summary judgment decisions.
Here the court considered the common law duty of 'good faith' in contract dealings, contrasting that 'duty' to fiduciary duties:[164] The issue is whether these actions constituted a breach of Shoppers’ duties related to good faith, which it owed to the Associates.
[165] Our courts have recognized obligations of good faith in contract. In Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, the Supreme Court recognized an organizing principle of good faith performance in contract and specific duties derived from this organizing principle. The law has recognized the importance of respecting the intention of the parties as embodied in their agreement and the role of the obligation of good faith.
[166] In Bhasin, the Supreme Court held that there is a duty of honesty in contractual performance applicable to all contracts. This duty means that parties must refrain from lying or otherwise knowingly misleading one another about matters directly related to the performance of the contract: Bhasin, at para. 73. “Knowingly misleading” another is not confined to direct lies – it can also include “half-truths, omissions, and even silence, depending on the circumstances”: C.M. Callow Inc. v. Zollinger, 2020 SCC 45, [2020] 3 S.C.R. 908, at para. 91. The court in Bhasin also held that, “[i]n carrying out his or her own performance of the contract, a contracting party should have appropriate regard to the legitimate contractual interests of the contracting partner.” This requires that a party not seek to undermine those interests in bad faith. However, unlike higher obligations of a fiduciary, good faith performance does not require the other contracting party to put the interests of the other contracting party first: Bhasin, at para. 65.
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