One-Sided Contracts: What to Watch For

Signing a contract or service agreement is a routine part of life. Whether you’re hiring a contractor, engaging a freelancer, or subscribing to a service, you’re likely sign some sort of agreement to solidify the terms. But not all contracts are created equal. A one-sided agreement can leave you vulnerable, especially if you don't fully understand the legal language or implications. In Ontario, consumer protection laws and contract principles offer safeguards, but it’s crucial to know what to look for before putting pen to paper.

Here are 10 ways to spot a one-sided contract or service agreement and what you can do about it.

1. Unclear or One-Sided Termination Clauses

If the contract allows the other party to terminate the agreement at will without notice, penalty, or justification but holds you to strict terms or penalties for cancellation, that’s a major red flag. In Ontario, contracts should ideally provide reasonable notice periods and reciprocal termination rights. According to basic contract law principles, both parties should have equal footing in ending an agreement.

2. Excessive Limitation of Liability Clauses

A limitation of liability clause caps the amount of damages one party can claim against the other. While common in business, when this clause shields only one party, especially the service provider, from nearly all liability, including for negligence, it's problematic. Courts in Ontario generally uphold these clauses unless they are unconscionable, but overly broad limitations (e.g., “we’re not liable for anything, ever”) may be unenforceable and are a sign of imbalance.

3. No Right to Refunds or Dispute Resolution

A fair agreement includes provisions for refunds or dispute resolution processes. If a service provider refuses to offer refunds under any circumstances or if the contract waives your right to seek remedies under law (e.g., small claims court), you should be wary. The Ontario Consumer Protection Act provides that consumers are entitled to fair treatment, especially with respect to cancellation rights and returns for certain types of contracts (e.g., internet agreements, future performance contracts).

4. Automatic Renewals Without Clear Notice

Clauses that renew your contract automatically without proper notice or an easy way to opt out can trap you in ongoing payments or obligations. Under Ontario’s legal principles, any automatic renewal should be transparent and disclosed clearly at the time of signing, with sufficient advance notice before the renewal date.

5. Unilateral Changes to Terms

If the contract says the provider can change the terms, pricing, or scope of service at any time without your consent, that’s a one-sided agreement. Courts have held that clauses allowing one party to unilaterally amend a contract are generally unenforceable unless there is a mechanism for notice and consent. This is especially relevant under consumer law, where material changes must be communicated in a clear, timely manner.

6. Unbalanced Payment Schedules or Upfront Charges

One-sided agreements often demand full payment upfront or include aggressive payment schedules, even if the service hasn’t started. If you’re required to pay 100% in advance but there’s no security that the service will be delivered, this exposes you to financial risk. In some sectors (e.g., home renovations), the Consumer Protection Act imposes limits on deposits and requires written contracts with specific disclosures.

7. Broad or Vague Language

Watch for terms that are overly broad or ambiguous like, “we may charge additional fees as necessary” or “services will be provided as deemed appropriate by us.” These clauses give one party too much discretion and can be used to justify actions not originally agreed upon. In legal disputes, vague wording is interpreted against the drafter (a principle called contra proferentem), but it’s best to avoid such contracts in the first place.

8. One-Way Indemnity Clauses

An indemnity clause requires one party to compensate the other for losses or damages. A one-sided indemnity clause might require you to indemnify the service provider, even if the loss wasn’t your fault. Fair agreements usually include mutual indemnification or, at the very least, tie indemnity to each party’s conduct or negligence.

9. No Governing Law or Jurisdiction Clauses

If your service provider is based outside Ontario or Canada, and the contract says disputes must be resolved in another country or under foreign law, this puts you at a major disadvantage. Contracts without a governing law clause or that specify an inaccessible forum for dispute resolution may be seen as unfair and impractical, particularly under Ontario’s legal standards.

10. Waivers of Legal Rights

Watch out for fine print that waives your right to participate in class actions, seek statutory remedies, or pursue litigation entirely. In Ontario, certain statutory rights under the Consumer Protection Act or Sale of Goods Act cannot be waived, and any clause that attempts to do so may be invalid. That said, you may still need to challenge such clauses in court to assert your rights—making it critical to identify and question them before signing.

Tips to Protect Yourself Before Signing

• Ask for Clarification: Never sign a contract you don’t understand. Ask questions or seek legal advice if anything feels unclear.

• Negotiate Key Terms: Even standard agreements can often be negotiated. Don’t be afraid to request changes to obvious one-sided clauses.

• Keep Written Records: Document all communications about the agreement. If something goes wrong, this helps protect your legal position.

• Know Your Cooling-Off Rights: In some contracts, such as door-to-door sales or personal development services, you may have a legal “cooling-off” period to cancel without penalty.

When to Seek Legal Help

If you suspect a contract is unfair or suspect that a service provider is exploiting the terms against you, it may be time to consult a legal professional. They can help assess the enforceability of the contract and protect your interests under Ontario law.

In today’s fast-paced world, service agreements are often signed without a second thought. But one-sided contracts can have long-lasting consequences. By knowing what to look for, you empower yourself to make informed decisions and avoid costly mistakes. Whether you’re entering a contract for business, home services, or personal use, take a few extra minutes to review these red flags and protect your rights!

Remember: a fair agreement benefits both parties. Don’t settle for anything less.