By: Margaret Ogbonnah.

Introduction:

In the bustling landscape of modern life, contracts are ubiquitous. From employment agreements to rental leases, contracts govern numerous aspects of our personal and professional interactions. The reality is that many people fail to thoroughly read the fine print before putting pen to paper.  Therefore, the casual acceptance of these legal documents without thorough scrutiny leads to a myriad of perils and pitfalls. This article aims to explore the risks and consequences associated with signing a contract without diligent review and comprehension.

Conceptual Clarification of the Term Contract.

A contract is an agreement, either written or spoken, between two or more parties that creates a legal obligation. The terms of a contract are enforceable by law, with clearly defined penalties and remedies should the contract be breached.

A contract is created when there is an offer, consideration, acceptance, and legal capacity between two or more parties. Also, a contract isn’t enforceable when it lacks the required elements, includes illegal provisions, is based on fraud, or duress, or involves parties without the legal capacity to enter into it.

Enforceability of A Contract on Parties.

A party is bound by the provisions in an agreement that he signs, even though he has not read them and signs unaware of their existence. Therefore, when a party “is negligent in not informing himself of the contents, and signs or accepts the agreement with the full opportunity of knowing the facts, he cannot avoid liability on the ground that he was mistaken concerning such terms.

Moreover, this is because courts do not want to reward people for being negligent in entering into contracts; contracting parties are held responsible for taking part fully in the contracting process. Thus, as long as a party entering into the contract has the capacity to read and understand it, the party will be bound by its contents and is not permitted to say that its explicit provisions are contrary to its intention or understanding.

Exceptions To the General Rule.

While contracts are generally enforceable regardless of whether they were read, certain exceptions may arise under specific circumstances:

1. Fraud or Misrepresentation: If one party deliberately conceals material facts or misrepresents information, the contract may be deemed voidable.

2. Unconscionability: Contracts that are egregiously one-sided or unfairly advantageous to one party may be deemed unconscionable and therefore unenforceable.

3. Duress or Coercion: Contracts entered into under duress or coercion, where one party is compelled to agree against their will, may be invalidated.

4. Mistake: In cases of mutual mistake or unilateral mistakes regarding a material fact, the contract may be voidable.

Mitigating the Risks

It is already established that the court enforces contracts against parties who accept or sign the documents. Therefore, the parties are bound by those terms even if they did not read the document and even if they are ignorant of some or all of its terms

Moreover, to mitigate the risks associated with signing unread contracts, individuals should adopt proactive measures:

1. Read Before Signing: Take the time to thoroughly read and understand the terms of any contract before signing.

2. Seek Legal Advice: Consult with a legal professional to clarify any ambiguities or concerns regarding contractual agreements.

3. Negotiate Terms: Don’t hesitate to negotiate terms that are unreasonable or disadvantageous. Contracts are often negotiable, and parties can propose amendments to better align with their interests.

In conclusion, it is always the best practice to read all contracts before you sign them. This way, there are no surprises later and you will not find yourself at the court’s mercy to get out of a sticky contractual situation.

References

1. Definition of a Contract https://www.contractscounsel.com/b/
2. The Perils of Not Having a Signed Contract (wrighthassall.co.uk)
3. What is an Enforceable Contract: Definition, Elements with Examples – Pandadoc: https://www.pandadoc.com/blog/enforceable-contract/
4. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3848253.