What Happens If a Person Is Tricked Into Signing a Contract?

When a Person Signs a Contract the Law Deems That the Signature Forged a Binding Deal to Create An Enforceable Agreement. The Contract Will Be Deemed Enforceable Even If the Signature Was Provided Carelessly Without Reading the Contract. However, Where Some Wrongdoing Was Used In Obtaining the Signature the Contract Should Be Deemed Void.

Understanding the Legal Principles of Signed Contracts Including Enforceability Concerns

Contract Document To enable confidence and security in the day-to-day function of business and commerce, assurance in the enforceability of contracts is of strong importance and is a need well recognized within the law.  Generally, the law will treat most contracts as genuinely entered into by the parties and will therefore enforce the contract subject to a few rare exceptions.

The Law

Where it is shown that a contract was entered into without a genuine intention, due to some form of improper conduct such as undue influence, duress by threat, misrepresentation, or lack of genuine bargaining, a court may deem that a contract is without binding force and is therefore merely just the appearance of a contract.

Intention

A contract, even if involving a signed document, legally exists only where a court may deem that the parties to the purported contract was entered into with intention.  Whereas a person was misled by false information, or other improper conduct, and would have declined to enter into the contract if the truth was told, a binding contract fails to exist.  Simply said, whereas a court determines that a person agreed to a contract only because of information or documents presented by the other person, or persons, to the contract, the court will deem that a lack of genuine willingness to agree occurred.  In law, the appearance of an intention that is instead legally deemed as a lack of intention, is often referred to by the Latin phrase non est factum, loosely meaning not his act or not his deed; and accordingly, the non est factum issue arises in law when a person argues that improper conduct, essentially some trick of sorts, was used to cause a person to unwittingly enter into a contract.  In regards to non est factum, this was explained well in the case of Alphera Financial Services Canada (BMW Canada Inc.) v. Ambihaipalan, 2021 ONSC 3530 which stated:

[32]  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.”: Marvco Color Research Ltd. v. Harris, 1982 CanLII 63 (SCC), [1982], 2 S.C.R. 774, and Bulut v. Carter, 2014 ONCA 424.

[33]  The absence of a misrepresentation and carelessness are fatal to the defence: The Guarantee Company of North America v. Ciro Excavating & Grading Ltd., 2016 ONCA 125 (CanLII). See Dorsch v. Freeholders Oil Co. Ltd., 1965 CanLII 90 (SCC), [1965] S.C.R. 670. This approach is based not only upon the principle of placing the loss on the person guilty of carelessness, but also upon a recognition of the need for certainty and security in commerce. Waberley v. Cockerel (1542), 1 Dy. 51.

[34]  In Muskham Finance Ltd. v. Howard, supra, at p. 912, Donovan L.J. stated:

Much confusion and uncertainty would result in the field of contract and elsewhere if a man were permitted to try to disown his signature simply by asserting that he did not understand that which he had signed..

As was further explained in Alphera Financial at paragraphs 35 to 38, the carelessness of a person who signs a contract without reading the contract fails to legally excuse a person from the obligations of the contract.  On this point, the Supreme Court in the case of Marvco Colour Research Ltd. v. Harris, [1982] 2 SCR 774, which was cited in Alphera Financial, said:

... As between an innocent party (the appellant) and the respondents, the law must take into account the fact that the appellant was completely innocent of any negligence, carelessness or wrongdoing, whereas the respondents by their careless conduct have made it possible for the wrongdoers to inflict a loss. As between the appellant and the respondents, simple justice requires that the party, who by the application of reasonable care was in a position to avoid a loss to any of the parties, should bear any loss that results when the only alternative available to the courts would be to place the loss upon the innocent appellant. ...

Of course, this is without saying that any contract signed is enforceable.  The key point in Marvco Colour is that where a party carelessly signs a contract and the other party is innocent of any wrongdoing, the careless party is inexcused from the contract; however, if there was wrongdoing, such as deceit, misrepresentation, undue influence, or duress, that unduly contributed to the signing of the contract, then regardless of the carelessness, the contract should be deemed a nullity.

Summary Comment

Generally, a signed contract is enforceable unless it is shown that the party who signed the contract only did so due to some wrongdoing on the part of the other party to the contract such as deceit, misrepresentation, undue influence, duress, or concealment of unusual and unexpected onerous terms.

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Law of Non Est Factum

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