Latin legal terms sometimes cause confusion for those outside the practice of law, making basic concepts seem more complex than necessary. In this post, we will break down a legal principle expressed in Latin that can be used as a defence in Canadian contract law; the defence of non est factum.
Defining Non Est Factum
The Latin phrase non est factum roughly translates to “that is not my doing”. In contract law, a party to a contract may invoke the concept when claiming a contract is invalid because they were mistaken about its meaning or nature at the time it was signed. As such, they should not be responsible to fulfill their obligations under the contract. If successfully pleaded as a defence, the contract may be rendered void.
In a future blog, we’ll look at situations where there is a mistake between both parties to the contract, but the doctrine of non est factum almost always applies in situations where there is a unilateral mistake; that is, a mistake by just one of the parties. For this reason, it can often be more difficult to establish this claim since most often there won’t be a mutual agreement that the party claiming non est factum was mistaken about its terms. Indeed, in order to be able to plead this defence successfully, the party to the contract (who is most often the defendant in a contract dispute) has a three-pronged threshold test that they have to meet.
Establishing “Non Est Factum” in a Contract Dispute
A party invoking non est factum as a defence in a contract dispute must prove on a balance of probabilities that:
- (a) they were mistaken about the nature of the contract;
- (b) the mistake regarding the nature of the contract was due to a misrepresentation by the other party to the contract; and
- (c) that they were not careless in signing the contract.
Perhaps the most important thing to understand in pleading this legal defence is that the burden of proving the defence rests on the party which is effectively seeking to “disown” their signature on a contract. It’s not an easy burden to meet. The doctrine was originally intended to address situations (and was thus restricted to cases of) where one party to a contract was illiterate or blind, or other situations in which one party would have to rely on another party to understand the contents of a contract. The defence has now been expanded so that it applies to other situations, but that three-part threshold test must still be met.
Mistake via Misrepresentation
In order for the non est factum defence to successfully apply, the defendant must show that not only did the plaintiff misrepresent the nature of the contract, but they must also show they fully believed in the truth of the misrepresentation. If the defendant knew or ought to have known of the falsity of a statement, they can’t then rely upon that misrepresentation to claim they didn’t understand the nature of the contract (or its terms) when they signed. The defendant must reasonably believe the misrepresentation to be true and rely upon that misrepresentation.
Many misrepresentation cases involving a successful non est factum involve real estate disputes, where an agent (whether deliberately or inadvertently) misrepresents the property to a buyer, who then wants to have the Agreement of Purchase and Sale voided because the property isn’t what they thought they were buying.
However, the doctrine can apply in other contractual situations that have nothing to do with real estate. For example, in Xerox Canada Ltd. v. Vandesign Graphix Ltd., the defendant was able to successfully plead non est factum in a case where the plaintiffs sued her for nearly $70,000 plus interest over a lease for copier equipment. The defendant had thought that she had signed the lease on behalf of the Vandesign Graphix company, rather than in her personal capacity. The judge ruled that the plaintiff (Xerox), had contributed to the plaintiff’s misunderstanding due to the form of contract used. The signature line, in particular, contributed to the defendant’s belief that she was only signing on behalf of the company, rather than her own behalf. Crucially, the judge also ruled that even if the defendant had read full text (or “fine print”) of the lease, it would not have made the defendant aware that she was signing it in a personal capacity and the plaintiff took no steps to inform her of this fact. As such, she was deemed not to have been careless or negligent and was able to successfully apply the non est factum defence.
Carelessness and Negligence
As mentioned, the defendant must prove they were not careless or negligent in signing the contract to meet the third part of the threshold test. Legal advice often plays a key role in determining whether someone was careless or negligent when signing a contract. If the person did have legal advice, it could be determined that they ought to have understood the contractual transaction, making it difficult to meet the third test in the threshold. On the other hand, if the person did not obtain legal advice before signing, they may be found to have been careless. There are, of course, many situations in which someone could sign a contract without the aid of legal advice for legitimate reasons, such as impracticality. For example, people commonly sign car rental agreements while on vacation without first having the contract reviewed by a lawyer.
Where it is convenient and practical to obtain legal advice before signing a complex contract, we always recommend doing so. If it is not practical to obtain legal advice and a dispute later emerges, especially in a situation where you may feel that you have been misled as to the nature of the contract, we can advise you on whether the defence of non est factum or other legal defences may apply.
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The lawyers at Prudent Law in Mississauga are trusted advocates in any type of civil litigation, including contract disputes. We provide practical advice and passionate representation in litigation, and contract disputes. If you are facing a legal dispute and you’d like to discuss it with one of our experienced litigation lawyers, please call us at 905-361-9789 or contact us online.