Legal forms valid_and_enforceable

Prepared By: Page 1 of 8
Michael Carabash

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Guide may be outdated.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. michael@carabashlaw.com
Need an Ontario Lawyer? Make a Post. Get FREE Quotes! www.DynamicLawyers.com

Is My Legal Form Valid and Enforceable? Page 2 of 8

Table of Contents
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



Introduction
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.


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



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.



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.


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