The duty to act in “good faith” in real estate contracts was dealt with in a recent Supreme Court ruling Bhasin v. Hrynew. The Court’s decision re-wrote existing Canadian case law about the legal duties of contracting parties during the negotiations of the contract and after the contract has been signed. The Court ruled that during the negotiation process each party have a right to pursue his or her individual self-interest and does not require either party to consider the interests of the other party ahead of his or her own. However, after the contract has been signed, the parties to the contract must perform their obligations arising from the signed contract part in “good faith” in an honest manner throughout the course of a transaction.
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