A common occurrence throughout our life is to sign a contract. We sign a lease for our first apartment; an offer to purchase and a mortgage for our home. A lease or purchase of a vehicle, an installment agreement for a product, a credit application…the list goes on and on. And it is so familiar to read what is important to us on the first page—How much will I pay? How many payments? To whom?—only to turn it over and see the paragraph upon paragraph of tiny, tiny print will all the legal terms and conditions.
We know we should read those terms; we may even read a heading or two to justify we have appropriately skimmed it. To be honest, many don’t really read it. (Let you in on a secret: Contract Lawyers who should know better are just as bad as everyone else!) And if everything goes correctly—every payment made timely, no bankruptcies or assignments, no injuries, issues, or problems—then the small print will likely never come into play.
But if something goes wrong or an issue comes up…then the small print becomes the focus and the payment terms and amounts fade into the background. We often say, “What the Large Print Giveth; the Small Print Taketh Away.” And this can get very expensive.
Recently, a case was discussed regarding an Arbitration Clause. Many contracts include language restricting any litigation to binding Arbitration—the parties are prevented from taking the matter to open, public court to have their case heard before a jury. Instead, any issue is heard within a private, expensive arbitration, barring the litigants from sharing the issues with other potential clients, and allowing companies to continue potentially dangerous practices.
A woman in a nursing home died. Her son discovered the roommate had killed his mother only when the District Attorney charged the roommate with murder; before this he had only been told his mother died. As it turns out, the Nursing Home was on notice the roommate was violent (had even been moved to the mother’s room because of violence against a previous roommate). But when the son initiated a lawsuit for negligence, he discovered there was an arbitration clause in the nursing home contract, forcing the matter into private arbitration! An arbitration were the entire opinion of the Arbitrator consisted of a check-mark next to a box stating the nursing home was not negligent.
The article notes at one time courts enforced these agreements, buried deep in the small print, but have now begun to re-evaluate this legal position and deny enforcement of the arbitration agreement, if the person signing was not authorized to agree for the person receiving the benefit. In this situation, the son signed the admission forms for his mother (as is common with Nursing Home contracts) and the court ruled he did not have authority to bind his mother to arbitration.
While the son had a Medical Power of Attorney to make medical decisions for his mother, the court did not address the situation if he had a Power of Attorney to make financial decisions for his mother.
Are you currently in a contract with an Arbitration clause? Do you know? Did you co-sign or guarantee a contract for someone else on a contract with an Arbitration clause? Does your contract have a jurisdictional limitation (where you would have to start suit in another state, despite never living there)? Or is there a limitation as to when you can start a suit?
While the court may…on occasion…assist a person to avoid a stringent term in a contract, it would be dangerous to rely upon it. Read what you sign; if you have a question it is always valuable to have an attorney review it before signing.