A photo of two people sitting at a table and signing a contract. Only their arms and torsos are visible above the table.

Contract Basics: The Pen Actually Can Be Very Mighty

You would be hard-pressed to find an adult in the United States who never has signed a contract. You rent an apartment; you sign a contract. You enroll your children in daycare; you sign a contract. You borrow money for school; you sign a contract. You join a gym; you sign a contract. This does not include the plethora of subscription services so common these days like entertainment streaming, cell phones, music services, product delivery services and so many more. We execute many contracts without a second thought, but not all contracts are created equally. Signing on the dotted line for that hotel room or rental car does not carry the same weight as entering into an agreement to buy or sell real estate, but the legal obligation you create when doing so remains the same.

Although the law is concerned where a contract is procured through fraud, misrepresentation, or duress, the courts aim to preserve our autonomy to contract with one another freely. The law does not concern itself with whether the terms of the agreement are reasonable or whether any party possessed enough knowledge to enter the agreement. The parties to any contract can have different levels of sophistication, and bargaining power might be unequal, but each one is legally bound to know the terms of the contract entered. The stroke of that pen comes with a duty to understand the document, and that is where many fall short.

Contracts can be difficult to understand simply because of the manner in which they are drafted. The legalese in many standard provisions can seem unintelligible to most, and some contracts will contain dozens of these confusing terms. However, ignorance is no excuse under the law, particularly when an agreement contains a provision indicating that the parties agree that its terms are fair, just, and reasonable. It is customary for contracts to contain such provisions which serve to cut off future challenges to that contract by one manner or another. These can be explicit waivers of rights, such as waiving your right to a jury trial to resolve future disputes, or implicit waivers like the one above. When you agree in writing that the contract is reasonable, you waive your right to challenge its reasonableness in the future even if you did not understand what you were signing.

While most would think to enlist the help of an attorney for contract drafting or negotiating, contract review is just as important. Agreements involving large sums of money or long-term obligations are most critical. A 5-year service contract can look great today, but circumstances can change for either party over that long a period, and that must be considered. An agreement requiring a sizable non-refundable down payment could result in a great loss if the agreement falls through for a reason other than a breach. From lawn service contracts to pre-nuptial agreements, any legally binding document must be reviewed thoroughly to ensure that you understand both your obligations and your rights under it.

Whether you need a contract drafted, negotiated, or reviewed, the experienced attorneys at Cornerstone Law can help. Contact us to schedule a consultation today.