What is the test for setting aside a partnership agreement?
British Columbia, Canada
The following excerpt is from Young v Sherk, 2019 BCSC 312 (CanLII):
In Lawrence v. Mulder, 2015 BCSC 2223 at paras. 53-54, the court found a party was vulnerable, given that she reasonably believed her relationship and the support she derived from it, would come to an end if she did not sign a partnership agreement. She was taken advantage of as she had no realistic alternatives. Paired with both parties’ inadequate understanding of the effects of the agreement, the court found it should be set aside.
Receiving independent legal advice at the time of negotiation is an important means of ensuring an informed decision to enter an agreement: Hartshorne v. Hartshorne, 2004 SCC 22 at para. 60. As such, in considering whether a party understood the nature and consequences of an agreement, the court must consider whether independent legal advice was obtained and if so, the quality of that advice.
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