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Honesty isn’t just the best policy — it’s the law, the Supreme Court of Canada has ruled.

In a case released Thursday called Bhasin v. Hrynew, the court said Canadian contract law comes with a duty of good faith that requires parties to perform their contractual obligations honestly.

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“Finding that there is a duty to perform contracts honestly will make the law more certain, more just and more in tune with reasonable commercial expectations,” wrote Mr. Justice Thomas Cromwell wrote in the unanimous seven-judge decision.

Commercial lawyers have been following the case closely. Some specific areas of law, such as employment and insurance, come with implied terms of good faith. The question was whether the court might apply the doctrine of good faith to all deals made in Canada.

“I think this is the most important contract case in 20 years,” said Neil Finkelstein of McCarthy Tétrault LLP, counsel for Harish Bhasin, the plaintiff who won the case. “We’re going to find another series of jurisprudence arising out of this case over time about how far this duty of good faith and duty of honesty goes.”