In-House Advisor

Signatures Really are Binding – Even if the Signatory Doesn’t Understand the Contract

October 5, 2023

   

Most people expect that by signing a contract they are going to be bound by it absent special circumstances. But do situations where the signatory is unsophisticated and/or doesn’t even speak the language in which the contract is written qualify as such special circumstances? As the Massachusetts Appeals Court recently confirmed in Lopez Rivera v. Stetson, the answer to that question is a resounding No!

Carlos Lopez Rivera was awaiting surgery and signed a form stating that any disputes regarding the surgery would be subject to arbitration. Notwithstanding the foregoing, Lopez Rivera later filed a malpractice action against Steven Stetson in the Massachusetts Superior Court. Stetson moved to dismiss based on the arbitration clause in the form Lopez Rivera signed, but Lopez Reiver countered that because he did not speak English and no one translated the form to him, his supposed agreement to arbitrate was invalid based on the doctrines of fraud, mistake and unconscionability.

The Superior Court agreed with Lopez Rivera, noting that he did not speak English and no translation of the form was provided to him. Stetson appealed that ruling, and the Appeals Court acknowledged that a party who signs a contract can avoid his obligations thereunder if he can show he was fraudulently induced into signing it, executed the document under duress, or if the contract was unconscionable. Specifically, the Appeals Court recounted that:

The general rule is that, in the absence of fraud, one who signs a written agreement is bound by its terms whether he reads and understands it or not.  This rule applies to a person who cannot read. The rule also applies to those who lack an “understanding” of the terms of the agreement or the English language.  Written contracts are intended to preserve the exact terms of the obligations assumed, so that they may not be subject to the chances of a want of recollection or an intentional misstatement. This longstanding rule rests upon the fundamental need for security in business transactions.

Because there was nothing to suggest that Stetson (or his staff) did anything to misrepresent the information in the form Lopez Rivera signed, the Appeals Court found that there was no basis on which he could prove fraud, duress or that the obligation to arbitrate disputes was unconscionable. In sum, the fact that Lopez Rivera may have signed the form at issue without reading or understanding it was a risk he assumed and, barring other, special circumstances, that fact did not provide him with any ability to avoid the obligations assigned to him in that document.

Finally, it is important to note that notwithstanding the fact that Lopez Rivera arose in the context of an agreement to arbitrate, the underpinnings of the decision are general contract principles, and this case provides strong precedent to enforce all manner of contracts if a party claims they should not be bound because they did not read or understand the terms.

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