It's time to review your standard forms! They may not say
what you think – and assuming they do can cost commercial
lenders money, time and aggravation.
Laurentian Bank of Canada v. Bonhomme, 2012 ONCA
Standard Forms. Businesses love them – but they are not
always read carefully every time they are pulled out.
Standard Forms are an essential tool to any business. They
assist in developing global practice standards, continuity in
corporate communications and consistency in business transactions
when serving a variety of client and customer needs. However, they
may pose a hidden danger.
In Bonhomme, the Bank sought to recover amounts owing
under a line of credit it had granted to B and M, as
B disputed his liability to pay the amounts claimed because the
Bank had advanced them based on a cheque that only M had
signed. B argued that, without his signature, he was not
responsible for the funds drawn, and that the Bank should not have
permitted the funds to be drawn without the signatures of both
The Bank disagreed, asserting that the agreement permitted
either B or M to draw funds under the line of credit.
Herein lies the standard form trap. The agreement provided
in part as follows:
The Bank shall be authorized to extend loans on presentation of
any cheque or other written request bearing the signature of the
Customer as subscribed to the present document...
"Customer" is described in the agreement as B and
The Bank obtained summary judgement and B appealed. The Court of
Appeal held that, on its face, the line of credit agreement was
ambiguous concerning whether "the Customer" meant one or
both signatories to the agreement. The issue required
extrinsic evidence and a trial.
The Bank likely intended "Customer" to refer to
either of B or M. But the lack of clarity in the
language has opened an unwanted Pandora's box – a box
overflowing with each "Customer" to whom the Bank has
extended credit using this particular standard form loan
agreement. The result is that a similar issue may arise with
each line of credit the Bank grants to two or more
"Customers", but the good news is that this is an issue
that the Bank can resolve with a simple revision to its standard
Do you know what your standard forms say or mean?
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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