Parties intended for defendant to be personally liable for obligation

Ontario civil | Agency

EXISTENCE OF RELATIONSHIP

Parties intended for defendant to be personally liable for obligation

Plaintiff hired defendant and agreed to help him buy a house where he would be working. Plaintiff advanced funds. Defendant signed agreement to be personally liable to repay majority of funds if he did not stay in plaintiff’s employ for five years. Defendant left plaintiff before five years ended. Defendant gave plaintiff post-dated cheques to repay amount advanced but bank returned one of cheques NSF. Plaintiff sued for balance owed. Defendant asserted he signed loan agreement as witness for his holding company, shielding him from liability to repay money. Plaintiff brought motion for summary judgment. Motion granted. Nature and content of loan agreement and circumstances in which it was signed established that defendant in signing below name of his corporation showed that parties intended for him to be personally liable for obligation agreement entailed. Where person’s signature appeared immediately above or below name of his corporation without another signature on document, and without clear indication that person was signing in representative capacity only, instrument was deemed to be ambiguous and court was to look to other evidence from nature and content of document and circumstances in which it was signed to determine whether parties intended signer to have personal liability for obligations in it. Defendant additionally assumed personal liability by authorizing corporation as his agent to enter into loan agreement on his behalf and to undertake that he would be personally liable to repay balance of funds he received. Defendant represented to plaintiff that corporation had authority to enter loan agreement on his behalf. Plaintiff was induced to advance funds to defendant by his representation that corporation was authorized to enter into loan agreement on his behalf and his acknowledgement that he would be liable to repay balance of funds advanced. Defendant was estopped from denying his personal liability having regard to fact that plaintiff relied on his promise to its detriment and to his benefit by advancing funds to him.
H.S.C. Aggregates Ltd. v. McCallum (Oct. 31, 2014, Ont. S.C.J., Price J., File No. Owen Sound CV-112-SR) 246 A.C.W.S. (3d) 819.

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