Most contracts are written in dated legalese that even the most seasoned lawyer can struggle to comprehend. Where one party to an agreement is less sophisticated and holds less power, and the other party (that likely drafted the contract) yields more power, courts will look to confirm that the less sophisticated party understood the agreement they were signing off on.
Courts are especially vigilant to circumstances where the lesser party bore an amount of risk that was significantly higher than the benefit they gained. A good example is a loan guarantee. A guarantor may not understand the document, and may not appreciate the risk associated with signing off on it. Where guarantors have not understood the repercussions of what they were signing, Courts have deemed those contracts as invalid and unenforceable.
The legal way of confirming that a party understands a contract is by ensuring that the party has had a chance to obtain independent legal advice (“ILA”). Accordingly, most agreements formalized in a written contract will contain an ILA clause to evidence that the parties have sought or have been given the opportunity to seek ILA prior to executing the contract. Here’s an example:
The Parties confirm having had the opportunity to obtain independent legal advice regarding this Agreement and that the parties are signing this Agreement freely and voluntarily with full understanding of its contents.
The absence of such a clause does not automatically invalidate an otherwise valid agreement. Lack of ILA is not a defence in and of itself. There is no rule or principle of law which conclusively obliges a party to ensure the other party receives ILA. In the absence of proof of non est factum (agreement is invalid because the defendant was mistaken about its character when signing it), unconscionability, fraud, misrepresentation or undue influence, Courts will not invalidate agreements. Absence of ILA is merely one factor in proving that the contract was unconscionable or that it was signed with undue influence. It is not determinative with respect to proving either of those grounds of invalidation.
Employment contracts are not exempt from the principles mentioned above. As a caveat, employment contracts are made between parties who almost always have an imbalance in bargaining power. After all, in most hiring situations, the employer drafts the employment agreement or offer letter. It is no surprise then that prudent and legally equipped employers routinely add ILA clauses to protect themselves from having their employment agreements being deemed invalid. Invalidating employment contracts has onerous effects on employers since it makes termination clauses limiting more generous ‘common law’ notice periods unenforceable.
What is more ambiguous is the length of time an employer should provide an employee to receive the ILA. Since the applicable laws are silent on the matter, looking at past court decisions is called for. Accordingly, three court/tribunal decisions have been made in Ontario that help paint a clearer picture for gauging how much time an employee should be provided.
First, in Sheehan & Rosie Ltd. v. Northwood, 2000 CarswellOnt 670, the Plaintiff employee complained that he was not told to seek ILA. The Judge held that the complaint was meritless since the employee had the employment contract in his possession for approximately two weeks, which was “ample opportunity” to obtain legal advice. In Kielb v National Money Mart Company, 2015 ONSC 3790 (CanLII), three days had elapsed from the date of the employment offer and the employee’s actual signing of the agreement. The Judge ruled that the employee had sufficient time to obtain ILA on the matter. The third case is Natalie Nedel v Davidson Violette & Associates Inc., 2019 CanLII 38006 (ON LRB), where the employee received the employment agreement by email following her interview on July 11, 2016. She signed it on her first day of work on July 12, 2016. The tribunal held that the employee had no realistic opportunity to obtain independent legal advice and that she had no time to consider the employment agreement prior to starting work.
Though these cases do not provide concrete rules, it appears that a time frame of at least three days is sufficient for an employee to seek ILA. An employee who receives less than three days will probably have a legitimate claim that they were not given enough time to seek ILA. What the cases also articulate is that an employee who is provided with two weeks or more, likely does not have a legitimate claim that they were not provided with adequate time to pursue ILA.