Hrynew, another enrollment director who competed, had proposed to merge their agencies and asked Can-Am to force it, but Bhasin refused.

He found that Can-Am acted dishonestly with Bhasin throughout the events leading up to the non-renewal: it misled him about its intentions with respect to the merger and about the fact that it had already proposed the new structure to the commission; it did not communicate to him that the decision was already made and final, even though he asked; and it did not communicate with him that it was working closely with Hrynew to bring about a new corporate structure with Hrynew's being the main agency in Alberta.

[2] Cromwell J, in a unanimous decision of the SCC, held that Can-Am was liable for breach of the duty of good faith by misleading Bhasin in the period leading up to exercising the non-renewal clause, both regarding its own intentions and Hrynew's role as the PTO.

However, Hrynew was not liable, as the Court of Appeal had held, because the requirements of inducing breach of contract and civil conspiracy were not made out.

As a sub-category of good faith, there is a duty to act honestly in the performance of contractual obligations, not capriciously and arbitrarily.

[4][5] It was agreed that further litigation will be required with respect to the scope and implications of the general organizing principle of good faith and the specific duty of honest contractual performance.

[6] In the meantime, there will be practical implications, including more precision in contract drafting, greater care in the exercise of contractual rights, and more diligent communication between parties.

[6] There has also been debate as to how this will reconcile with the doctrine of utmost good faith, especially with respect to the manner in which termination clauses operate in the area of insurance contracts.