Callow and misleading conduct before contract termination

In C.M. Callow Inc. v. Zollinger, 2020 SCC 45, the Supreme Court considered misleading conduct surrounding the termination of a winter maintenance agreement. The terminating parties complied with the contractual notice provision, but their conduct had knowingly misled Callow about the agreement's future.

Callow had performed extra summer work without charge while hoping to encourage renewal of the winter agreement. The condominium group had already decided to terminate, yet the surrounding communications and conduct left Callow with a misleading impression about the relationship's future. The Court's analysis shows why delivering the minimum contractual termination notice may not answer a separate allegation of dishonest performance. The issue was the misleading course of dealing, not a free-standing duty to renew the maintenance contract.

The decision explains how the duty of honest performance can be breached through a course of conduct, including misleading half-truths or silence in context. It does not require disclosure of every intention to terminate. For service businesses, the practical takeaway is to preserve communications about renewal, extra work, and termination rather than reviewing the notice clause in isolation. Whether compensation follows depends on the proven breach, causation, and applicable damages principles. The facts of a later dispute still require individual assessment.

For a contractor, retain the renewal discussions, extra-work records, decision dates, and evidence of opportunities affected by the misleading conduct. For a customer, ensure communications about ongoing performance and future work accurately reflect the position rather than knowingly allowing an impression your conduct has created to persist. In a later claim, identify the alleged dishonesty and resulting loss carefully. The case supports examining the entire exchange, but it does not turn an optimistic business expectation into an enforceable renewal promise or make every silence before termination a breach.

Sources

• C M Callow Inc v Zollinger 2020 SCC 45
• Bhasin v Hrynew 2014 SCC 71

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General Ontario legal information, not legal advice for your matter, and reading it does not create a retainer. Sources checked 15 October 2026: check the current law, forms and dates before you act.

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This article is general information for people in Ontario, not legal advice. Rules, forms and deadlines change, and every situation is different. Check the current rule or speak to a licensed legal professional before you act.