'You're Making A Bad Deal': Tilden Rent-A-Car Rides Again!

When do parties have an obligation to point out onerous contractual terms during contractual negotiations? In the recent case of MacQuarie Equipment Finance Ltd. v. 2326695 Ontario Ltd. (Durham Drug Store), the Ontario Court of Appeal addressed how "extremely onerous or unfair" contract terms may be unenforceable if inadequate notice of those terms was provided to the other contracting party at the time of contract formation.1

What you need to know

Potentially expanded the scope of obligations for negotiating parties. In certain circumstances, contracting parties have an obligation to bring "extremely onerous or unfair" contract terms to the attention of the other party. Failing to do so may result in such terms being unenforceable. While this obligation was previously confined to consumer contracts of adhesion (such as a rental car contract), it is possible that MacQuarie may have extended this obligation to circumstances involving negotiated deals between sophisticated parties. The scope of this obligation is uncertain. MacQuarie involved extreme facts in the context of fraud (although neither party to the contract at issue had participated in the fraudulent activities). Therefore, this principle may not be applied with the same force to more traditional contractual negotiations. Context is key. Courts will look to the surrounding circumstances of the negotiation in deciding whether there was an obligation to point out a term to a counterparty. It may be that the contractual term is reasonable on its face, yet unenforceable when viewed in light of the interactions among the parties during the negotiations. Background

In 2015, MedviewMD Inc. agreed to supply Durham Drug Store with a telemedicine studio to provide remote medical services to the public. Medview then emailed Ms. Abdulaziz, the owner of Durham Drug Store, a written Master Service Agreement (MSA), which set out the terms between them.

A few days later, a representative from an equipment leasing company, Macquarie, attended Durham Drug Store and provided Ms. Abdulaziz with a proposed lease between Macquarie and Durham Drug Store for the telemedicine equipment. Unlike the MSA with Medview, the lease contained a broad term that purported to eliminate Durham Drug Store's ability to terminate or cancel the lease.

Ms. Abdulaziz did not review the lease in detail, believing it to be a copy of the MSA. Although she noticed Macquarie's name on the document, she believed it was another...