Before you sign on the dotted line

How many times have you signed a contract that you haven’t read? Or clicked “Accept” to download some software or an app without looking over the terms and conditions?

Many of us are guilty as charged. We figure the terms are standard and can’t be changed anyway. Or, we’re too busy to read through all the fine print. And we likely wouldn’t understand it even if we tried.

In effect, we’re giving up the chance to protect ourselves – perhaps with the hope the courts will stop anyone from taking egregious advantage of us through a confusing contract.

To some extent, the courts do. A decision in 2017 by the Supreme Court of Canada, called the Sabean decision, asserts two important principles related to clear writing and clear language:

1. Courts will interpret the terms of a contract based on their plain and ordinary meaning. A consumer is not expected to have industry-specific knowledge unless they are part of that same industry. The onus is on the company to ensure that contract terms with an industry-specific meaning are clearly defined so that an average person can understand its meaning.

2. Ambiguity can be claimed only where two reasonable interpretations of a contract are possible. Where one of those interpretations relies on specialized knowledge – knowledge that goes beyond the clear words of the contract – the Court may deny any claims of ambiguity.

The Sabean decision will surely touch many industries that use standard contracts with consumers. Think about the contracts you’ve signed for insurance. Borrowing money. Buying a car. Buying a home. Renovating your home. Replacing your furnace or water heater. When’s the last time you saw a clear contract that’s written in plain language the average person can understand?

So, contract writers be forewarned. If you are preparing a contract for consumers, it will likely be given a plain language interpretation. Make sure that’s the interpretation you want your customers – and the courts – to make.