The Ontario Court of Appeal just released a decision in a commercial case that may offer lessons applicable to employment contracts.
MacQuarie Equipment Finance Ltd. v. 2326695 Ontario Ltd. (Durham Drug Store), 2020 ONCA 139 dealt with a provision in a lease agreement for equipment which stated that the lease could not be cancelled or terminated early for any reason. The Court accepted that parties to a contract can agree to such a termination provision and that it can be binding even if the contract is not read. However, the Court relied upon the reasoning in Tilden v. Clendenning, 18 OR (2d) 601 to find that in certain circumstances a party seeking to enforce an onerous clause may have an obligation to draw the signing party’s attention to the clause.
On the unique circumstances of this commercial case, the Court held that the termination/non-cancellation clause in the lease could not be enforced because the leasing company did not take steps to point out the clause to the party that signed it hurriedly without reading it. The Court held that the party seeking to enforce the clause should have both brought it to the attention of the other party and explained it.
More broadly, the Court’s reasoning suggests that, in certain cases, reasonable measures must be taken to draw harsh and oppressive terms to the attention of the other party; inadequate notice of a particularly unfair term may render the term unenforceable.
Query whether restrictive termination clauses in employment contracts should be held to the same standard. In other words, should an employer who presents a standard form contract which takes away an employee’s rights on termination be expected to draw the clause to the employee’s attention and explain its impact at the time of signing?
Though this was a commercial case, counsel for the successful appellant in this case was employment lawyer turned workplace investigator, Amer Mushtaq. We will be watching the case closely to see whether it gets followed by courts outside the commercial context.