The Alberta Court of Appeal has once again emphasized the importance of “getting it in writing” and also making sure any agreement is signed, especially where there is a husband and wife.
It is often inconvenient to have both spouses sign an agreement. One of the parties will say something like, ’’don’t worry, my spouse agrees and has asked me to go ahead and take care of this’’. This situation can arise in many instances such as buying or selling real estate or signing contracts for renovations or construction where both a husband and wife are owners. In the present case, the Alberta Court of Appeal looked at a situation where Mr. and Mrs. Swift owned some land and retained an architect and designer to design their dreamhome.
The agreement with the architect had a clause limiting liability to $500,000. Due to design flaws, Mr. and Mrs. Swift suffered damages in excess of $500,000. When they sued for the full amount of the damages, the architect defended by saying the total amount of their potential liability is $500,000 as stated in their contract. At trial, the Judge stated that the limitation of liability clause applied. The Judge said there was ample evidence to show that Mr. Smith was acting on behalf of both he and his wife when he signed the agreement. The Judge stated that Mr. Swift was acting as the agent for Mrs. Swift.
The Court of Appeal decided there was not enough evidence to show that Mr. Swift was the agent for Mrs. Swift. As a consequence, the limitation of liability clause did not apply against Mrs. Swift and she could sue for the full amount of all damages suffered. In this case, the Court of Appeal stated that it is not enough that Mr. and Mrs. Swift are married and they are joint tenants on the property. Also, the fact that it was typical of the family affairs that Mr. Swift would sign on his wife’s behalf and she was ’’on board’’ with the project was simply not enough to establish Mr. Swift was the agent for Mrs. Swift for the purpose of signing this contract.
There are simple mechanisms that can be used to establish that only one signature is required. For example, a written authorization from Mrs. Swift confirming that Mr. Swift was her agent and authorizing him to sign documents for the design and construction of the house would likely have persuaded the Court of Appeal. Also, a Power of Attorney would have been decisive.
Galbraith Law often prepares either a conventional or an Enduring Power of Attorney for couples so that one can authorize the other to sign contracts or agreements in their absence. This avoids the necessity of two signatures on every contract or agreement and can be quite useful and convenient. However, be aware of the power and potential liability you are giving to someone else when you sign a Power of Attorney. Visit the Enduring Power of Attorney section of our website for more information about the unique characteristics of an Enduring Power of Attorney.
If you have any questions or wish to book an appointment to talk about a Power of Attorney please contact us at 780.483.6111.