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Contracts - Tilden v Clendenning

. Deswal v. ADT LLC (ADT Security Services)

In Deswal v. ADT LLC (ADT Security Services) (Ont CA, 2021) the Court of Appeal considered when a commercial party had a duty to draw specific terms of a contract to a consumer's attention:

[7] In Fraser Jewellers (1982) Ltd. v. Dominion Electric Protection Co. (1997), 1997 CanLII 4452 (ON CA), 34 O.R. (3d) 1 (C.A.), this court emphasized that, in a commercial setting, in the absence of fraud or other improper conduct that induced a plaintiff to enter the alarm services contract, the plaintiff bore the onus to review the contract and satisfy itself of its advantages and disadvantages before signing it. As this court stated at para. 32, “[t]here is no justification for shifting the plaintiff’s responsibility to act with elementary prudence onto the defendant.”
. MacQuarie Equipment Finance Ltd. v. 2326695 Ontario Ltd. (Durham Drug Store)

In MacQuarie Equipment Finance Ltd. v. 2326695 Ontario Ltd. (Durham Drug Store) (Ont CA, 2020) the Court of Appeal considered when specific terms of a contract must be expressly notified by the party advancing the term:
[31] We do not dispute the ability of the contracting parties to agree to such a “no cancellation” provision in an adhesion contract such as the Lease between Macquarie and Durham Drug Store.

[32] Nor do we dispute the binding effect of a party’s assent to a contract’s terms by signing it, whether or not they read the contract with appropriate care or at all. As noted by Professor John D. McCamus in The Law of Contracts, 2nd ed. (Toronto: Irwin Law, 2012), at p. 193: “If an agreement is entered into on the basis of a document proffered by one party and signed by the other, it is clearly established that the agreement between the parties contains the terms expressed in the document, whether or not the signing party has read the documents.”

[33] However, Professor McCamus adds that sometimes, even with a signed agreement, inadequate notice of a particularly unfair term may render that term unenforceable, at p. 194:
In many contractual settings, it will not be expected that a signing party will take time to read the agreement. Even if the document is read, it may well be, especially in the context of consumer transactions, the purport of particular provisions of the agreement will not be understood by the signing party. Under traditional doctrine, then, although the fact of the signature appears to dispense with the notice issue, the opportunities for imposing harsh and oppressive terms on an unsuspecting party are, as a practical matter, as present in the context of signed documents as they are in the context of unsigned documents. Accordingly, it is perhaps not surprising that the recent jurisprudence indicates that notice requirements are migrating into the context of signed agreements.
[34] The leading Ontario case on this point remains this court’s decision in Clendenning. There, Dubin J.A. (as he then was) for the majority refused to enforce a limitation of liability provision in a car rental agreement that purported to exclude the rental company’s liability for a collision where the customer had driven the car after consuming alcohol. Before renting the car, the customer had chosen to pay an additional premium for “collision damage waiver”, which he had been led to understand provided comprehensive insurance for vehicle damage. He signed the rental agreement without reading it.

[35] In finding the exclusion clause unenforceable, Dubin J.A. highlighted that such a rental transaction was typically concluded in a “hurried, informal manner”, and that the liability exclusion provision was “[o]n the back of the contract in particularly small type and so faint in the customer’s copy as to be hardly legible”: at pp. 602, 606. The exclusion clause was also “inconsistent with the over-all purpose for which the transaction is entered into by the hirer”: at p. 606.

[36] In these circumstances, Dubin J.A. concluded that “something more should be done by the party submitting the contract for signature than merely handing it over to be signed” (at p. 606) — namely, reasonable measures must be taken to draw harsh and oppressive terms to the attention of the other party, at p. 609:
In modern commercial practice, many standard form printed documents are signed without being read or understood. In many cases the parties seeking to rely on the terms of the contract know or ought to know that the signature of a party to the contract does not represent the true intention of the signer, and that the party signing is unaware of the stringent and onerous provisions which the standard form contains. Under such circumstances, I am of the opinion that the party seeking to rely on such terms should not be able to do so in the absence of first having taken reasonable measures to draw such terms to the attention of the other party, and, in the absence of such reasonable measures, it is not necessary for the party denying knowledge of such terms to prove either fraud, misrepresentation or non est factum.
[37] In our view, the highly unusual circumstances of this case bring it within the principle in Clendenning. Without suggesting that there was any intention to mislead Ms. Abdulaziz, here, the no-cancellation provision should have been specifically brought to Ms. Abdulaziz’s attention. It should have been explained to her that she would remain obligated to pay for the telemedicine equipment under the Lease even if Medview defaulted on its obligations.


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Last modified: 01-01-23
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