October 6, 2026

By Mark Mikulasik

Independent legal advice is often recommended or required before you sign an agreement. Common situations include domestic contracts, leases, loans, and guarantees.

This usually happens when the documents are for somebody else’s benefit. But are they for your benefit?

We have written before about the role of independent legal advice (“ILA”) in rebutting arguments of undue influence surrounding spousal guarantees.

THE ISSUE

If you are requested to obtain ILA, what does that mean for you?

Is the risk worth the benefit?

THE SHORT ANSWER

In most commercial or property cases, this means that you will be required to honour whatever agreement you signed, even if it a bad deal.

This may vary for domestic contracts, where if a party did not understand the nature or consequences of the domestic contract, it may be set aside. But better not to have to rely on that possibility.

THE BOTTOM LINE

If someone asks you to get ILA, make sure that you get GOOD ILA.

And ask yourself if it a good deal for you:

• What are YOU getting out of the deal?
• Do you understand the agreement?
• What are the risks?
• If things go bad, can you live with that risk?
• What happens if you DON’T sign?

 

Good ILA will help you with these questions. Bad ILA not only doesn’t help, it also might just leave you feeling more confused, or pressured.

AFTER YOU SIGN

There are a few defences that can be tried if you sign after bad ILA, but Ontario courts almost always find these defences do not apply. The “little old widow who didn’t understand”  situation might still be the exception to this general rule, but even this is seldom applied.

You might have a remedy, namely suing the lawyer who gave you the bad ILA. That usually does not excuse you from having to honour the agreement. It requires that you prove that the ILA was wrong, or inadequate in some way, and that with proper ILA, you would not have signed the agreement. Expensive, time consuming, stressful and risky. It will not keep you in your home. You may have already lost the family farm. Not a great option.

THE CASE

In Chand Morningside Plaza Inc. v. Healthy Lifestyle Medical Group Inc., the Ontario Court of Appeal has a lot to say about trial process, and the ongoing importance of pleadings in that process.

For our purposes here, what is important is what it says about independent legal advice. Which is:

.. in order to protect against a claim that the instruments relied upon are vitiated, the lender must take reasonable steps to try to ensure that the persons signing the instruments understand the transaction and are entering into it freely. A lender may accomplish this by suggesting that the signers seek and obtain independent legal advice and a full explanation of the transaction…

…any deficiencies in the independent legal advice are a matter between the lawyer who gives the advice and the clients who receive it, unless the lender knows or ought reasonably to have known of them. The lender is entitled to rely on a certificate of independent legal advice from a lawyer licensed to practice law in the jurisdiction, so long as the lender did not have any knowledge, direct or otherwise, that there is an issue of the authenticity or propriety of the independence of the legal advice

[citations omitted, emphasis added]

Chand is a straightforward example of a common situation where parents guaranteed loans to support their son’s business. Things went bad, and the lender demanded payment under the guarantees. We have explained previously why it is important to take guarantees seriously.

Along with other defences, the parents claimed that the independent legal advice that they had received with respect to those documents was inadequate, and that they did not understand what they were signing.

The trial judge found in their favour, but the Court of Appeal overturned that judgment and sent the case back for a new trial, so we do not know the final result.

This dispute dates back to 2011. It goes on. Imagine, even if ultimately, the parents succeed, whether on their defence or by suing the lawyer who gave bad ILA, the inconvenience and stress suffered by them.

You do not want to be in that position.

BETTER TO GE GOOD ILA IN THE FIRST PLACE

Make sure the lawyer giving the advice is really independent

There is nothing necessarily wrong in the borrower, or even the lender, suggesting a lawyer who can give you the advice. But they must truly be independent.

Simply put, they need to be taking care of your interests, not motivated to help friends colleagues or associates get a deal signed.

Ask yourself-

• Why am I seeing this lawyer?
• Am I comfortable with this lawyer?
  • Who is paying this lawyer?
• Are they treating me like a client?

Which overlaps with the next question

Is this lawyer properly prepared to give this advice?

Sad to say, this is not always the way ILA takes place.

Ask yourself:

• Does this lawyer practice in this area of law?
• Have they spent the time to prepare?
  • Have they read the loan, lease or other documents?
  • Do they understand not just the document which I am asked to sign, but the entire context, that is, the overall deal?
  • Do they ask me questions about why I am signing?
  • Do they ask questions about things like:
    • my age
    • my level of experience
    • my motivation
    • the relationship of the parties
    • their relative bargaining power.
    • Enough about my financial situation to know the financial impact of the transaction on me, if it goes bad
  • Can they satisfactorily answer my questions?
  • Do they explain the nature of the deal?
  • Do they explain the risks of the deal?
  • Do they explain the effect of those risks on me?
    • Do they take the time to understand my ability to take this risk?
  • Do they make sure I really understand the risks?
  • Do they advise me to sign only if I am informed and comfortable with those risks?

You should sign only if you are satisfied with the answers to these questions.

WHAT WEILERS LLP CAN DO TO HELP YOU

Our real estate and commercial lawyers continue or proud tradition of almost 80 years of advising and representing both borrowers and lenders in financial transactions of all sizes.

Our experience equips us to give Good ILA.

If things go wrong, and you receive a demand to pay, our litigation team works seamlessly with our real estate and commercial lawyers when a lawsuit cannot be avoided.

Our family law team has the expertise to advise you about all sorts of domestic contracts and work seamlessly to with our commercial and real estate lawyers when those areas overlap.

If you are asked to sign a document that benefits somebody else, and wonder how it might affect you, give us a call and see if we are the right lawyers for you.