You have recently been appointed a director of a company or society. Or maybe you signed an agreement that said something about "acting in good faith" or a "duty of good faith". Or maybe you did not see it in an agreement or specifically stated as one of your responsibilities, but you have heard that the law in Canada requires one to act in good faith. The duty of good faith, also known as bona fide in Latin, is one of many very important common law legal principles. It suggests that one should not act in bad faith, but what is the meaning of good faith?
The duty of good faith requires parties to act honestly and fairly. It means that parties need to follow the spirit of the agreement. The duty of good faith applies to many situations, but sometimes in very different ways. A teacher has a duty of good faith to their students and their employer. A businessperson has a duty of good faith to their supplier and their clients. A doctor owes a duty of good faith to their patient. A driver of a car has a duty of good faith to other people on the road.
In summary, it is a requirement in law to act honestly in your contractual dealings with other parties. The failure to act in good faith, contrary to your contractual obligations whether implied or explicit, can result in a court awarding damages to the other party.
Matthew J. Van Den Hooven
Matthew is a lawyer based in Nanaimo, B.C. Please note that the accuracy of the information in this blog is not guaranteed and that the law does change. It is not a replacement for independent legal advice. Contact Matthew to arrange for an appointment today.