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Feb

17

Is My Legal Form Valid and Enforceable (Part 2): Substance

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to drafting, negotiating, or resolving a dispute concerning an agreement, you should seek professional assistance (e.g. make a post on Dynamic Legal Forms). We have Toronto, Ottawa, Brampton, Hamilton, and other Ontario family law lawyers registered on Dynamic Legal Forms who can offer information, advice, and assistance with respect to your agreement.

As a follow up to my previous blog introducing the topic “Is My Legal Form Valid and Enforceable?”, in this blog I’ll be talking about 3 big SUBSTANTIVE issues which could allow a party to challenge an agreement (in whole or in part) and have it struck down by a court. Those 3 substantive issues have to deal with the actual terms and conditions of the agreement and are: (1) clear, complete, and complete terms, (2) consideration, and (3) against public policy. So let’s 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!

Consideration
For any contract to be valid and enforceable, there must be an element of what is called “CONSIDERATION”. Consideration means that there has been a real and fundamental exchange between the parties. Consideration is generally defined as an act, forbearance (i.e. not doing something you’re legally entitled to do), or promise by the promisee (i.e. the party receiving the promise) undertaken IN EXCHANGE for the promise. Consideration requires that some benefit flow from the promisor (i.e. the party making the promise) or that there is some detriment to the promisee in exchange for the promise. Consideration must move from the promisee. The party seeking to enforce the promise must show consideration. Motive or desire to make a promise does not constitute good consideration. If a party is already under a pre-existing legal duty to do or not do something, that may be challenged as not being adequate consideration. Similarly, if a party is under a public duty to do something, then that is generally not considered to be adequate consideration. Finally, a pre-existing duty owed by one party to the other may not be adequate consideration unless something new of value is being provided. To wrap your head around it, just think about this example: if I promise to give you $1,000 if you like me more, there is NO consideration. Why? Because liking me more is not something that is recognized as having monetary value by our judicial system. It is not a promise that that can be enforced. So it’s lacking consideration and is not valid. Get it? Here’s another example of an agreement WITH consideration: in exchange for paying you $1,000, I promise not to sue you for the damage you did to my house. This time, I’m promising not to make a claim against you, even though I could. I’m giving up something of benefit in exchange for something valuable from you (i.e. money). There’s a real and fundamental exchange here so this agreement can be valid and enforceable.

Contrary to Public Policy
Contracts – in whole or in part – that are against public policy can be challenged and rendered invalid and unenforceable. Contrary to public policy means that there is some injury to public goods or morals (e.g. violating a statute, obstructing the administration of justice, etc.). There is no definitive list of what constitutes public policy as this is a legal question left for judges to determine. That said, example of contracts that may be contrary to public policy include:

  • A party agrees to commit a crime;
  • A party agrees to give false testimony; or
  • A party agrees to not publish a story in a newspaper that ought to be published.

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 Legal Forms) 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 in the next blog…

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