Prepared By: Michael Carabash

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Is My Legal Form Valid and Enforceable?

DISCLAIMER: Please note that the information provided in this DL Guide is NOT legal advice and is provided for educational purposes only. Laws are subject to change quickly and without notice. This DL Guide may be outdated. You are always advised to consult with a lawyer if you have questions about the validity and enforceability of a legal form in Ontario, Canada (e.g. make a post on Dynamic Lawyers). We have Toronto, Ottawa, Hamilton, Brampton, Mississauga and other Ontario lawyers registered to help you. You can contact Michael Carabash directly at michael@carabashlaw.com.

Last Updated: March 2010 © 2008-2010, Dynamic Lawyers Ltd. All Rights Reserved.

Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

michael@carabashlaw.com www.DynamicLawyers.com

Is My Legal Form Valid and Enforceable? Table of Contents

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Introduction .................................................................................................................................................... 3 Clear, Complete, and Certain Terms .............................................................................................................. 3 Consideration .................................................................................................................................................. 4 Contrary to Public Policy ............................................................................................................................... 4 Duress ............................................................................................................................................................ 5 Undue Influence ............................................................................................................................................. 5 Unconscionable Bargain ................................................................................................................................. 6 Misrepresentation ........................................................................................................................................... 6 Mistake ........................................................................................................................................................... 7 About Us ......................................................................................................................................................... 8

Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

michael@carabashlaw.com www.DynamicLawyers.com

Is My Legal Form Valid and Enforceable?
Introduction

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You download a template. It is incomplete. You read it over and finish it. Perhaps you even add a few provisions of your own to take into account your particular circumstances. Then you and all the other parties sign it and deliver it to each other. So, is it a valid and enforceable contract? The answer is: “IT DEPENDS”. The truth is that parties may never know if their legal form is valid and enforceable unless it has been reviewed by a court at the conclusion of a lawsuit. But if you want to try to avoid having a judge make that determination for you, there are a few things you should be aware of. Under contract law, for a contract to be valid and enforceable, there are a number of basic requirements concerning the SUBSTANCE of the contract (i.e. the terms and conditions of the actual contract) and the PROCESS of how the contract was entered into (e.g. was it entered into fairly and freely?). If there are issues with either the SUBSTANCE and/or the PROCESS of how it was entered into, then the contract can be challenged in whole or in part. Having a lawyer on hand may help to mitigate these and other issues from the get go. In what is to follow, SOME of the more common ways in which contracts can be challenged will be discussed. Bear in mind, however, that there ARE MANY OTHER WAYS a contract can be challenged! For example, a statute may have minimal requirements that need to be met in order for a legal form to be valid. For example, the Ontario Substitute Decisions Act, 1992 states that witnesses are required for the signing of a Continuing Power of Attorney for Property and specifies who cannot be a witness. That’s just one tiny example. At the end of the day, you should always speak to a lawyer about your particular situation to mitigate against potential challenges. So here we go…

Clear, Complete, and Certain Terms
First, the terms that are in the contract itself must be clear, complete, and certain enough to be enforceable. Long-winded, incomplete, and vague terms can be challenged and perhaps rendered invalid and unenforceable by a court. So if you’re adding provisions of your own to a legal form, always ask yourself: “Is this term or condition clear enough for a reasonable person to understand?” and “Are important terms – such as price, timeline, consequences, etc. – missing”? Worth noting is that an agreement to agree about some critical part of the contract at a future time could also be challenged and struck down by a court. If significant terms are left out of a contract and the parties simply agree to come up with an agreement about them later, then the entire contract may be challenged! An agreement to agree is generally not enforceable.

Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

michael@carabashlaw.com www.DynamicLawyers.com

The full DL Guide is available for FREE with the purchase of a Legal Form.

Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

michael@carabashlaw.com www.DynamicLawyers.com

Is My Legal Form Valid and Enforceable?

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Overall, while there are MANY OTHER WAYS to challenge the actual SUBSTANCE of a contract, some of the more common ways are noted above. It is always recommended to speak with a lawyer (e.g. make a post on Dynamic Lawyers) if you have any questions about the substance of your legal form – particularly if you’re modifying the template yourself! Now onto the PROCESS of entering into the contract.

Duress
DURESS is a legal doctrine that allows a party to challenge an agreement on the basis that they were so seriously coerced by another’s party’s illegitimate exercise of power such that they could not freely consent to entering into the agreement. Examples of duress include threats or acts that are unlawful (e.g. criminal, tortuous, breaches of contract, etc.) or illegitimate (e.g. threatening to refuse to enter into a contract or to terminate a contract lawfully unless…). Basically, if there’s some kind of unlawful or illegitimate pressure that isn’t in the normal course of market forces, then it could amount to duress. Specific examples could include: A party threatening another party’s life or limb unless they enter into an agreement; A party threatening to sue another party unless they enter into an agreement; and A party threatening to call the police on another party unless they enter into an agreement.

Undue Influence
UNDUE INFLUENCE is similar to duress as it is concerned with the adequacy of a party’s consent to enter into the agreement. Unlike DURESS, however, undue influence may exist without violence or threats of violence against a party. Undue influence depends on the RELATIONSHIP between the parties which causes one party to confide in the other and leads the other to take advantage and exert a natural influence over the other. Undue influence can be used to challenge a contract on the basis that a weaker party was dominated by or unduly influenced by the other party. Examples of relationships that could lead to challenging contracts based on undue influence include: doctor-patient, parent-child, trustee-beneficiary, priest-churchgoer, etc. So there’s a special relationship that involves trust, confidence and influence. To get around this type of challenge, a party could try to argue that the other party received full disclosure, had independent legal advice, and had only a minor disadvantage when it came to unequal power. Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes! michael@carabashlaw.com www.DynamicLawyers.com

The full DL Guide is available for FREE with the purchase of a Legal Form.

Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

michael@carabashlaw.com www.DynamicLawyers.com

Is My Legal Form Valid and Enforceable?

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Mistake
An agreement may be challenged in whole or in part on the basis that there was a mistake. Mistakes get made all the time. Sometimes, only one party makes the mistake (UNILATERAL MISTAKE). Other times, both parties make the same mistake (COMMON MISTAKE). And other times, both parties make mistakes but their mistakes are different (MUTUAL MISTAKE). Interestingly, a contract may actually contemplate that there is a mistake and how it ought to be dealt with. Sometime, the parties claim that there was a radical or fundamental difference between the document they thought they were signing and the document actually signed (in terms of character, contents or otherwise). But the signer cannot raise that defence if they failed to use reasonable care in signing the document. So, overall, there are many ways that a contract can be challenged and struck down – in whole or in part. Specific examples include (but are not limited to): Vague or missing terms Lack of Consideration Duress Undue Influence Unconscionable Bargain Misrepresentation Mistake Note, that there are other ways in which a contract can be challenged – for example pursuant to the doctrines of promissory estoppel (i.e. where a party makes a clear and unequivocal promise or representation to another party that it will not insist on its strict legal rights under the contract, and the other party alters its position in reliance on the promise or representation, the first party may be estopped from asserting its strict legal rights) or frustration (i.e. something outside the parties’ control makes it impossible for one or all of them to carry out their obligations in the agreement). If you have any concerns over the validity and enforceability of your legal form – in whole or in part – based on the principles of contract law outlined above or otherwise, you should consult with a lawyer (e.g. by making a post on Dynamic Lawyers). Remember: an ounce of legal prevention can save you a pound of pain later on.

Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

michael@carabashlaw.com www.DynamicLawyers.com

The full DL Guide is available for FREE with the purchase of a Legal Form.

Michael Carabash, B.A., LL.B., J.D., M.B.A. Need an Ontario Lawyer? Make a Post. Get FREE Quotes!

michael@carabashlaw.com www.DynamicLawyers.com

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