Ramifications of Not Reading a Contract
by Roger T. Manwaring

We all know that it is unwise to sign any legal document without reading it, but the full ramifications of doing so may surprise you. You will likely be bound by the contract as written, even if your prior negotiations suggest a different interpretation of its terms, and even if the other party has fraudulently mislead you about the provisions of the contract you sign.

“One who signs a writing that is designed to serve as a legal document ... is presumed to know its contents.” Hullv. Attleboro Sav. Bank, 33 Mass. App. Ct. 18, 24 (1992). This is true even where the person signing has not read the contract. Markell v. Sidney B. Pfeifer Foundation, Inc., supra (“One who knowingly signs a writing that is obviously a legal document without bothering to ascertain the contents of the writing is ordinarily bound by its terms, in the same manner as if he had been fully aware of those terms, unless it can be proved that he was induced to sign it by fraud or undue influence.... That he does not know the terms that he is agreeing to is not a mistake, but a conscious choice and a known risk”).

Sometimes, the parties to a written contract make oral agreements at or before the time they sign the contract, which alter or vary its written terms. However, a party who signs a written contract, even without reading it, cannot evade the rely on such prior or contemporaneous oral agreements. The so-called parol evidence rule, “bars the introduction of prior or contemporaneous written or oral agreements that contradict, vary, or broaden” a contract which contains all essential terms and is not facially ambiguous. Bay Fishing, Inc. v. MBTA, 57 Mass. App. Ct. 1105, 2003 WL 152299, *2 (1/22/03) (unpublished), citing Kobayashi v. Orion Ventures, Inc., 42 Mass. App. Ct. 492, 496 (1997). It is, therefore, inadvisable to sign a contract based on oral agreements without first reading it to verify that it reflects those oral understandings.

Of course, the parol evidence rule does not apply when a party has been induced to sign the contract by fraud on the part of the other contracting party. When one party alleges fraud, a court will consider evidence of alleged oral misrepresentations by the other party. Yet, even in cases of fraud, one who has signed a contract without reading it may be bound by its terms. In order to avoid a contract due to fraud, a party must establish that the defendant: (1) made a false representation (2) of a material fact (3) with knowledge of its falsity (4) for the purpose of inducing the plaintiff to act thereon and (5) that the plaintiff relied upon the representation as true and acted upon it to [her] damage.” Masingill v. EMC Corp., 449 Mass. 532, 540 (2007) (Emphasis added). 

With regard to the reliance element of the claim, the Supreme Judicial Court recently stated: It is unreasonable as a matter of law to rely on prior oral representations that are (as a matter of fact) specifically contradicted by the terms of a written contract. This is a rule of long standing…. Id. at 541. (Emphasis added). Thus, where a contract expressly says one thing, a party who signs without reading cannot avoid the contract by relying on the other parties fraudulent assurance that the contract actually says the opposite. Reliance on the fraudulent oral assurance would be unreasonable given the terms of the written contract.

In Collins v. Huculak, 57 Mass. App. Ct. 387 (2003), for example, brothers whose father had required them to sign a deeds benefiting their sister claimed that the father had fraudulently induced them to sign the documents by telling them that the documents were “for the bank” and concealing that they were deeds. 

The Appeals Court rejected the fraud claim, stating:  Even if we accept the plaintiffs' argument that each of them relied upon the father's misrepresentation, we must consider whether such reliance was reasonable. The plaintiffs were summoned individually to meet with their father. He demanded they sign a document folded over to avoid their review. Their signatures were required for the document to be valid; hence, the father's demands. The plaintiffs could see their names appearing in type below the signature lines. At a minimum, the circumstances were suspicious. The father pulled the document away from Robert when he grasped it, and he responded harshly to any questioning. All three plaintiffs should have been on notice that the document was of significance and legal import. …

Moreover, even the most cursory examination of the document would have revealed (a) that it was not “for the bank” as the father had represented, and (b) that it was in fact a deed conveying away the plaintiffs' interests in the Brookline property. See, e.g., Kuwaiti Danish Computer Co. v. Digital Equip. Corp., supra at 468, 781 N.E.2d 787 (“cursory review of ... language ... would have alerted [plaintiffs] that they could not rely on ... statements”). We conclude that the record supports the judge's finding that it was not reasonable or justifiable in these circumstances for the plaintiffs to sign the document without reading it. Id. at 392-93. 

The message of these cases is clear: never sign a legal document without reading it and always ensure that all terms of your agreement are reflected in the written contract. Reliance on oral side agreements, or on the other parties assurances as to the contents or meaning of the written contract is unwise.

If you have questions regarding this or any other legal matter, please contact Roger T. Manwaring at rtm@barronstad.com or (617) 531-6584.