The “Duty to Read” Is Not Absolute

by Brian Rogers on January 19, 2014

in Missouri Contract Cases

Duty to Read

When you sign a contract, the law presumes that you’ve read it and understand its contents. This is commonly known as the “duty to read.” The duty to read is one of the concepts that tripped up plaintiff Victoria Major in this case about a browsewrap “contract”; although Major never read the website’s terms of use, she was held responsible for agreeing to them.

In the words of one Missouri court, the law “presumes that a party had knowledge of the contract he or she signed; and those who sign a contract have a duty to read it and may not avoid the consequences of the agreement on the basis that they did not know what they were signing.” Grossman v. Thoroughbred Ford, Inc., 297 S.W.3d 918, 922 (Mo. App. W.D. 2009).

Although the duty to read creates a presumption, the presumption can be overcome. Lonergan v. Bank of America, N.A., which was decided about a year ago, is one such case. In Lonergan, the United States District Court for the Western District of Missouri ruled on a motion to dismiss under Rule 12(b)(6) that the duty to read did not apply to the plaintiffs at this early stage in the proceedings (the motion to dismiss stage is very early in the litigation process, before evidence is developed).

The plaintiffs alleged that the true amount of monthly payments under a mortgage was concealed from the plaintiffs and that it differed materially from what had been represented to them. They also alleged that the settlement agent showed up to the closing late, didn’t afford the plaintiffs time to read the loan documents, and neglected to review the terms of the documents with the plaintiffs at closing.

The court held that under these circumstances, because the plaintiffs’ complaint alleged fraud, and because the presumption that parties to a contract have read the agreement only applies in the absence of fraud, dismissal of the suit would be inappropriate.

Image courtesy of Flickr by Ian Wilson.

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{ 6 comments… read them below or add one }

Jay Parkhill January 20, 2014 at 12:20 pm

This reminds me of my recent experience buying a car. I kept waiting to get a contract I could review but never got it. There are just a bunch of screens on an antiquated CRM system, then an e-signature and then we were done.

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Brian Rogers January 20, 2014 at 2:06 pm

Companies are often taking on unnecessary risk when they don’t create a fair signing process. Besides duty to read issues, they could create procedural unconscionability issues.

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Elie Maron January 22, 2014 at 7:00 pm

I’m always tempted to redline, in hand, the small print that comes w/ various items, and send it back with a note stating that failure to hear from them in 30 days means they’ve accepted MY terms.

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Brian Rogers January 22, 2014 at 10:02 pm

Have you seen TOS Amend? Might come in handy.

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Sarah Fox February 4, 2014 at 8:49 am

In the UK the Office of Fair Trading has just published a survey which looked at consumer habits when entering into contracts. The OFT reviewed the data and its concluded that anyone agreeing contracts with consumers had to assume that the consumer would not read the T&C. As a result it is even more important that businesses do not have surprises or nasties or unfair terms in their small print.

Tips for dealing with consumers and the other reports are available from http://www.oft.gov.uk/OFTwork/markets-work/consumer-contracts.

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