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Standard-form contracts may be negotiable, even when they are not negotiated

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Business law, Civil and commercial litigation

One should take great care in the determination of the type of contract being dealt with. More specifically, it should be noted that a contract can only be qualified as an adhesion contract if its terms are not negotiable (that is, cannot be negotiated), which is different from a contract whose terms are simply not negotiated.

As such, in order for a standard-form contract to be qualified as adhesive, one contracting party should not be able to negotiate its terms. The difference here is subtle and is not always easy to discern, as most people feel that pre-prepared, standard form contracts cannot be negotiated, but this is false.

In a recent case, the Court was called upon to apply section 41 of the Code of Civil Procedure that states that a venue provision contained in a contract is valid unless the contract is an adhesion contract. While the plaintiff argued that the standard-form leasing contract that was signed was, by its very nature, adhesive, the Court found that it did not have enough evidence to support that claim.

This can be very important in any litigation since the type of contract we are dealing with can often grant, or even sometimes take away, a variety of rights to or from the parties. More than anything else, this is often a source of confusion that can prolong a dispute needlessly.

This being said, always make sure to consult your legal counsel in order to be properly prepared before signing any legal document.

Harry Karavitis, Attorney-at-Law
Alepin Gauthier Avocats inc.

 

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