Admit it, we have all been in situations where we sign a contact without reading it. This happens online, when we click to agree to the terms of usage for a website. It occurs offline as well. Clients regularly contact my office after they have been sued and have asked me if they are bound to the contract that they signed without reading it.
A couple of weeks ago my client a contractor was sued because he didn’t read the contract and the work he performed was different than what was specified under the contract. Can he be held responsible for not performing as per the agreement?
The short answer is yes, he can be held liable. The general rule is that the failure to read a contract before signing it does not enable one to ignore the obligations stated in the contract on the basis that they did not read the contract or that the contents of the contract were not known to the party.
There are special circumstances that provide exceptions to this general rule. They include, but are are not limited to:
1. Fraudulent inducement
2. Mutual mistake of fact.
There are certain situations, where you might sign a contract without reading it or understanding it and the terms are grossly unfair. This could be the small print in a rental agreement. In some situations, some courts have looked into the circumstances under which it was executed and the relative positions of the parties.
Be aware that if you sign an agreement as a corporate entity, the courts have ruled that the signing a contract is expected to have read all of its provisions and understood that it would be binding on everyone. It is presumed that since both parties are sophisticated, they have an obligation to read the agreement and are thought to understand it.
The Law Office of Frederic R. Abramson represents businesses and individuals in New York. If you have any questions about contracts, feel free to contact me at 212-233-0666.