Have You Read The Fine Print – A “Must Know” About Contracts

Do you read the fine print?

How many times have you downloaded an app, or clicked on something on a website that said, “I Agree”. A good guess is more than once or twice, but have you really agreed to the terms and conditions of that contract. Is everything in that agreement enforceable? Should you be concerned?

Contract law is a form of tort law, where a tort is a civil wrong where one party, or person, causes another party, or person, with loss or injury. The party that commits the “wrong,” or tortious act, is legally liable. There is NO nationwide federal law governing contracts. It varies completely state by state, even though transactions may occur over state lines. It is the interpretations of each states’ common law of contracts which can benefit, or hurt you.  There are some states where non-compete covenants are highly enforceable and favor employers versus employees. As well as there are some states that have covenants which limit punitive damages and have “limitation of negligence liability” clauses. So it is important to be aware which state a contract would be enforced if you needed to challenge or if there was a breach.

IMPLIED CONTRACTS

There are times where you may enter a contract and may not even know. If you accept payment or benefit from a party or person with the expectation of services or goods, that can be an “implied contract.” An implied contract is an enforceable agreement through the legal system that arises from conduct, from assumed intentions, from some relationship among the immediate parties, or from the application of the legal principle of equity. In other words, it is an agreement which if not written but created on the basis of the behavior of the parties involved. In optometry, an implied contract exists when you, the optometrist examines and treats patients. It is implied that you will do your best to examine and treat the patient, and the patient will pay the fee you charge. 

In terms of employment contracts, there are certain definitions to beware. Most employees work “at will,”, which essentially means they can resign at any time, AND the employer can fire them at any time for any reason that is not illegal. This is usually a non-negotiable covenant of being an “at-will” employee, however, if you want to prove that an implied contract exists, you would have to point to particular positions, actions, statements and practices where an employer leads you, the employee, to reasonably believe you would be fired for good cause. That is why it is imperative to receive an employee handbook, or if you’re a practice owner, to have a handbook in place. Not every state recognizes implied contracts and so, they may not be enforceable!

NOTICE

There are basic requirements for contracts that must be understood by all parties, either written or oral contracts. This is called notice. It is the legal concept which requires parties to be aware of the legal processes affecting their rights, obligations, and duties, ie: public notice, actual notice, constructive notice and implied notice. In contracts, there are usually items that are in all-caps, underlined, and/or bolded specifically for you to read and understand carefully before you agree to any of the terms. How many times have you read through an app agreement and clicked to accept the terms of service? There are cases throughout different states where those types of agreements, called “browsewrap agreements,” were not enforceable because particular articles of the contract did not explicitly imply constructive notice. Always read through your contracts and make sure you understand all bolded, underlined, and words that are all-capped.  It does not matter if you have actually acknowledged that article, but implies you, a reasonable person should have known and understood the article.

VERBAL CONTRACTS

Is an agreement enforceable if it is not written in “black and white?” YES! Verbal, or oral contracts are enforceable and the court will rule on these agreements if there is enough evidence. These are usually “he said, she said” battles and not very common as written contract disputes because they are difficult to defend. The Statue of Frauds does not accept oral contracts in specific instances, such as:

• • • • • • • • • Real estate sales
                • Real estate lease agreements lasting longer than 1 year
                • Property transfers after the owner’s death
                • Contracts that take more than 1 year to complete
                • Agreements to pay someone’s debt
                • Contracts that last longer than the life of a part
                • Contracts over a certain amount (depends on state)

The burden of proof falls directly on the plaintiff and not the defendant. Courts will rule and will be favorable when the plaintiff provides adequate evidence. Evidence can be e-mails, pictures, text messages, and/or the provide evidence of the existence of an oral contract.

For all contracts to be enforced, there are requirements that must be met:

1. 1. 1. 1. Offer – the expression of readiness to the terms of the contract by the offeror.
         2. Acceptance – the unconditional agreement which is communicated by the offeree to the offeror.
         3. Consideration – the notice, price or some other influence which influences a party to enter into a contractual agreement.
         4. Intention to Create Legal Relations – clear intentions by both parties where articles are legally enforceable by the contract terms.
         5. Capacity to Contact – both parties entering a contract are of reasonable and sound mind.

¹http://www.businessdictionary.com/definition/implied-contract.html

²https://en.wikipedia.org/wiki/Notice

³https://www.coloradocontract.com/are-oral-contracts-enforceable/