Unless you’re a witch (you’re not), your contracts don’t manifest fully formed out of thin air. They're the product of a negotiation, and whether long or short, the process will consist of you and the other party generating ideas about what the deal will look like. Sometimes during the negotiation, one of you may make a promise that for whatever reason doesn’t end up in the final written agreement. But when the other party assumes it’s still part of the deal, that’s when things can get FUBAR.Read More
Let's do some role-playing. Pretend you're a young man named Tristan Watson who has agreed to participate in an MTV reality show called True Life: I'm a Chubby Chaser, a doc about men who prefer dating large women. Let's also pretend you agree to do the show on the condition that MTV withholds your identity, referring to you only as "Tee" during the broadcast. This agreement is made via handshake, but the anonymity clause is never incorporated into the final written contract, which you sign. Once the show airs, you discover that not only is your full name used, but MTV also broadcasts your address and even your apartment number. You receive death threats and you lose your job. You sue the network for lying to you about its promise of anonymity and for all the harm it has wrought in your life, but because the contract also includes an agreement that you "will not sue the network for any reason," you lose big time.
Sadly, this is no game. There is a real Tristan Watson and everything I just said actually happened to him. Watson's experience is not a novel one. Contracts that broadly favor one side happen quite a bit in the entertainment world where one party (i.e. MTV) has considerably more bargaining power than the other (i.e. Watson). These lopsided contracts are even more prevalent in the nonsensical world of reality TV, where American teens will sign away their birthright for a chance to become a celebrity and the networks make absolutely no attempt to be reasonable in contracting with said teens. Unfortunately for Watson and those like him, even if the contract hadn't contained a promise not to sue, there are two inter-related concepts in contract law that ensure he was destined to lose his lawsuit against MTV.
- Absent extraordinary circumstances such as fraud, U.S. courts presume that every party to a contract has read and understood the terms. So pleading ignorance when you discover you agreed to something you didn't intend almost never works. Had Watson taken a few minutes to read the contract before signing it, he would have discovered that the anonymity clause was nowhere to be found and might have avoided the drama following his appearance on True Life. This is a shining example of why you should always always always read your contract, even the ones you write yourself.
- In situations where two parties agree verbally to a term, but never actually integrate it into the final contract, that term is not considered valid once the contract is written and signed. This is called the parol evidence rule, and it's almost impossible to overcome if incorporating that term would change the contract.
Look I get it. Reading contracts is no fun. They're boring, they're long, they contain a lot of junk, and they're usually written in legalese, making them tough to understand. Believe it or not, lawyers hate reading contracts for the same reasons. It's true! Why do you think we charge you so much money to draft and review your agreements? Because it sucks!! That's why mobile apps specializing in generating simple contracts (like Shake) are making a big splash nowadays.
Sucky or not, however, there's no getting around it. Whether you're a high-bargaining party or a low-bargaining party, then only way to preserve your interests is to get comfy reading contracts. There's no better way to ensure that harmful provisions weren't snuck in there when your back was turned. Because once you put your signature on that piece of paper, that's all she wrote my friend. You are bound to the terms in that contract whether or not you read it.
[Author's Note: I should add that if Watson could prove MTV acted fraudulently, the entire contract would be invalidated, including the promise not to sue the network. Since Watson lost his lawsuit, I'm guessing that he couldn't meet that burden.]