What Happens If a Person Signs a Contract Without Understanding the Terms Within the Contract?

A Contract Is Legally Binding If a Person Agrees to the Contract Despite Lacking An Understanding of What the Contract Means.

Understanding That Carelessness When Signing a Contract Fails to Negate Contractual Obligations

Contract Document Contract law in Ontario is regulated under common law, meaning there is no written statute or legislation guiding the principles on written contracts, but rather former Court precedent or decisions on the matter.

Often in the legal field a Defence attempted to be used is the defence of non est factum, which in layman’s terms this essentially means that the contact is “fundamentally different from what he or she intended to execute or sign”.

Although the Defence of non est factum seems like a simple plea, it is not and is very difficult to prove.

Contract law is a complex area of law with many different leading decisions that can assist in an outcome; however, one of the most important considerations in a contract dispute is the following:

Was the person disputing the contract careless in doing so (i.e. failing to read and understand the contract or obtain independent legal advice).

The leading case in this area is the Supreme Court of Canada Case of Marvco Colour Research Ltd. v. Harris, [1982] 2 S.C.R. 774, which states the following:

The defence of non est factum was not available to respondents. Any person who fails to exercise reasonable care in signing a document is precluded from relying on non est factum as against a person who relies upon that document in good faith and for value.

The Ontario Court of Appeal case of Bulut v. Carter, 2014 ONCA 424 (CanLII) further held:

[18]  The trial judge correctly set out the test for non est factum identified in the seminal case of Marvco Colour Research Ltd. v. Harris, 1982 CanLII 63 (SCC), [1982] 2 S.C.R. 774. The defence of non est factum is available to someone who, as a result of misrepresentation, has signed a document mistaken as to its nature and character and who has not been careless in doing so.

The important note to take from the above is that, an individual must “not be careless” in signing a document, even if they are doing so as a result of misrepresentation.  Signing a document without understanding it or obtaining independent legal advice is not a defence, and the Courts clearly agree that the party who lacked to take proper care should bear the consequences.

Therefore, read contracts before signing contracts; and if you don’t understand the contract, seek professional legal advice.  Doing so will save you a lot of grievance down the road.

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