Believe it or not, a signed contract is not always enforceable.
A while back, I wrote about our Clients who are surprised to learn that a contract can be enforceable when it’s not in writing. Here, I discuss how a contract in writing may not be enforceable. (In short, the law doesn’t always care about formalities, but will instead seek out the true agreement of the parties, regardless of what is or is not on paper.)
This issue comes up more often that you’d expect, and in the past month, our office has dealt with it at least three times. In one case, a Client signed a one-page, handwritten “lease” on farm ground, which the tenant later tried to enforce. He sued our Client seeking six-figure damages. The testimony at trial revealed that although our Client signed the “lease”, the document was not intended to be a lease, but, instead was quickly written up solely for the purpose of permitting the Tenant to get financing and crop insurance. The jury tossed out the claim, and the judge awarded our Client several thousand dollars for costs related to the lawsuit.
In another case, a divorce decree was entered based on a stipulation between the parties, signed on the same day the divorce was started. The decree divided the property in a manner grossly unfavorable to our Client, and tacked on alimony on top of that. Our firm was hired to “undo” the judgment. Again, the law provides several options for the judge to cancel the decree and, essentially, go back to square one on the division of the marital assets and alimony. That action is still pending.
And in yet another example, a Client of ours asked us to enforce a $61,000 debt from a former business partner, who had signed an agreement promising to pay that amount. In this case, the other side argued that the contract wasn’t enforceable because it was “unfair” and a “penalty clause”. That action is also pending.
An even more common occurrence is with boiler-plate language in an insurance policy or other consumer contracts. Again, courts often care more about what is “fair” than what’s actually written down. Likewise, if there is an industry custom or usage given to certain phrases (or documents), then a court may interpret the text in a different way than what the contract appears to say in 'black and white'.
This issue is also related to one of our firm's niche practice areas: challenging a Last Will and Testament that was signed by the deceased, but which gives property and money in a way which does not represent the deceased's true wishes and intentions.
If you have a situation involving a disputed contract (signed, unsigned, oral, or written), or if you encounter what appears to be a "contested will" our Firm would be happy to review the facts and help you decide if you need an attorney.
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