Employee claiming intellectual disability when agreement was signed

Dealing with employee's claim he wasn't fit to sign resignation agreement

Stuart Rudner
Question: An employee who signed an agreement that included his resignation has now come back saying the agreement is not valid due to the fact he has an intellectual disability and was not capable of making that kind of decision at the time. Is this a valid complaint and what can we do to avoid a similar situation in the future?

Answer: It is always frustrating when a dispute is finally resolved only to find, some time later, the other side is trying to get out of the deal. In the situation described, the employee is taking the position that he should not be bound by the agreement he entered into due to the fact that he was not intellectually or mentally capable of appreciating the consequences of it at the time. This is one of several mechanisms that can be used in order to avoid the obligations for which one has contracted.

In other circumstances, employees may argue they should not be bound by an agreement due to the fact there was a lack of consideration. This often occurs in the context of employment agreements which an employer seeks to enforce at the time of termination. Many employers fail to have employment agreements executed properly in the sense that they make a verbal offer of employment, which is accepted, and then subsequently present a written employment agreement. At that time, it is generally too late, as a verbal agreement has already been entered into. In order to make the new, written agreement enforceable, some consideration or benefit would have to flow to the employee.

Employees can also argue they should not be bound by an agreement due to the fact it was entered into under duress, or the terms of the agreement should not be enforced due to the fact they are too oppressive or too vague to be enforceable. It is also possible for employees, or any party to a contract, to argue there was no true “meeting of the minds” with respect to the substance of the contract, and as a result the contract should not be enforced.

In answer to the specific question, the claim made by this individual could be a viable one. However, the outcome will depend upon the evidence he is able to present with respect to his intellectual disability and its impact on his ability to appreciate the import and consequences of the agreement he entered into.

Typically, employers asking employees or ex-employees to enter into a settlement agreement will include provisions in the agreement that try to prevent an employee from backing out of the contract in the future. Agreements can include provisions confirming the employee has read and understood the terms of the agreement and all of its consequences and has had the opportunity to consult with a lawyer. It is also a good practice to ensure the employee is given a reasonable period of time within which to seek legal advice; presenting an agreement and requiring an immediate signature is a good way to create an agreement that is open to challenge.

It seems unlikely more contractual issues involving individuals with intellectual disabilities will arise, but if there is any suspicion such a disability does affect someone you are entering into an agreement with, it would be prudent to raise the issue with them or their counsel and, where possible, obtain documentation confirming they are capable of entering into a binding agreement at the time.

Stuart Rudner is a partner who practices commercial litigation and employment law with Miller Thomson LLP’s Toronto office. He can be reached at (416) 595-8672.

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