Failure to Read the Contract is NOT an Excuse

Non Est Factum Defence

The “non est factum” defence is a principle in law that a person may not be liable for their contract if they did not fully understand and appreciate what they may have been signing.

A person who is drunk, a person who is intoxicated by alcohol or drugs, a patient on medication and so on, may be able to assert this claim. But, it’s not a good defence for the careless and the foolhardy. Maybe they didn’t have their wits about them, but, that’s their fault.

There is an interesting case and perhaps leading case in the Supreme Court of Canada dealing with this issue, Marvco Colour Research Ltd. v. Harris (1982). The matter went to the Supreme Court on appeal where Harris was the appellant and Marco was the respondent. Initially, at trial, Marvco had been the plaintiff and Harris the defendant.


1. Harris executed a mortgage and guarantee in favour of the lender Marvco.

2. Harris did so based entirely upon the assurances of his son-in-law that the document being signed was merely to correct a minor discrepancy in a prior mortgage he had signed.

3. Harris did not read the document before he signed it.

4. He later sought to avoid liability on the basis that he did not understand the nature of what he had signed due to the fraudulent misrepresentation of his son-in-law.

Court analysis

The Court stated:

“. . . As between an innocent party (the appellant) and the respondents, the law must take into account the fact that the appellant was completely innocent of any negligence, carelessness or wrongdoing, whereas the respondents by their careless conduct have made it possible for the wrongdoers to inflict a loss.

As between the appellant and the respondents, simple justice requires that the party, who by the application of reasonable care was in a position to avoid a loss to any of the parties, should bear any loss that results when the only alternative available to the courts would be to place the loss upon the innocent appellant.

In the final analysis, therefore, the question raised cannot be put more aptly than in the words of Cartwright J.:

“…which of two innocent parties is to suffer for the fraud of a third”.

The two parties are innocent in the sense that they were not guilty of wrongdoing as against any other person, but as between the two innocent parties there remains a distinction significant in the law, namely that the respondents, by their carelessness, have exposed the innocent appellant to risk of loss, and even though no duty in law was owed by the respondents to the appellant to safeguard the appellant from such loss, nonetheless the law must take this discarded opportunity into account.”


The Supreme Court held that where a person carelessly fails to read a document before signing it, and the document permits a fraud to be perpetrated on an innocent third party, the doctrine of non est factum does not apply.

The careless party is bound by the document he or she signed.

Harris, in executing the security without the simple precaution of ascertaining its nature in fact and in law, has nonetheless taken an intended and deliberate step in signing the document and have caused it to be legally binding…, even though it may have sprung from good intentions, precludes the defendant in this circumstance from disowning the document, that is to say, from pleading that his mind did not follow his respective hand when signing the document and hence that no document in law was executed…


This is the law! And it has been since 1982 when the Supreme Court of Canada decided this would be the law.

Frequently, courts are called upon to decide cases involving two innocent parties. Neither are guilty, both are victims. But which victim should suffer the loss?

The Supreme Court of Canada has indicated that the party who:

• Contributed to the loss
• Caused the loss
• Induced the other party
• Acted carelessly
• Had the opportunity to prevent the loss

is the one who should bear the loss in the circumstances.

While the non est factum defence might work against the son-in-law, it doesn’t assist as against the innocent lender.

Brian Madigan LL.B., Broker

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