The importance of reading the fine print in contracts…

It can be tempting to gloss over contracts rather than reading the terms that are included in it, but reading and understanding all aspects of a contract before you sign it may be more important than you think. 

Contracts are the most common way of ensuring that an agreement you make is binding in law. They are a very helpful tool in ensuring that all parties know exactly what they are signing up for when making an agreement. People can however be taken advantage of in this process if they do not take an appropriate level of care before signing a contract. 

Lack of Legal Protection

A very important consequence of failing to properly read a contract before you sign it is that you may be exposed to legal consequences. There may be a clause in the agreement that requires you to do something, or refrain from doing something. A breach of this clause may lead to the other party bringing proceedings to ensure that you fulfil your obligation.

A common example of a clause like this is a restraint of trade clause in an employment contract. Under one of these clauses an employee will agree not to work for a competitor of their employer for a period of time after they resign. If an employee signs an employment contract that includes a clause like this and unknowingly breaches it, their employer may file proceedings against them to prevent them from working at a new job in the same industry.

Unexpected Clauses

Another common consequence of overlooking the fine print of a contract is that the contract may include clauses that you don’t expect. This could include hidden fees, lengthy terms, or penalties for failure to comply. 

A common example of this is an agreement a customer may sign when joining a gym or arranging a phone plan. These contracts often include hidden fees, or hefty late fees that become payable if you miss a payment. As well as this, companies will frequently sign you onto these plans for lengthy periods,

even if you stop using the service. This can lead to a customer being obligated to pay a company for periods much longer than they need.

There are however laws in place that provide protections from unfair contract terms. Generally, a term will be unfair if:

• it puts you at an unfair disadvantage because of the imbalance of rights between you and the business;
• it would cause you detriment if the business relied on it; and
• the term is not reasonably necessary to protect the business’s needs.

Protect Interests

Contracts also commonly include clauses that waive your rights, or warranties that you can only claim if you meet certain criteria. These rights or warranties may be very important to you and you may not even know you’ve waived them until you try to make a claim to the other party. 

An example of this is a warranty on a product when buying a good. If you buy an expensive piece of equipment such as a washing machine or a new phone, it’s likely that your purchase agreement will include a warranty. 

It is often the case that companies will include criteria in a purchase agreement that need to be met to claim the warranty. Not knowing these criteria may make a claim unsuccessful and could result in you being left with expensive repair bills. 

It is critical to read the fine print in a contract, as a failure to do so can be very frustrating and can cost you dearly. If there is confusion around the terms of a contract, it pays to seek advice from a professional in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.