You Can’t Do That – Contracts, it pays to read the fine print

Contracts (Photo credit: NobMouse)
        Bartering, bargaining and reaching mutual agreements are nothing new to anyone in the world.  Contracting someone to accomplish a task, in some cases short term, can prove to be an effective way of managing a business or task, within a fixed or flexible budget, so it should be little surprise that when contracts are written, mutual agreements in terms are a focus.  Most persons when faced with a contract usually listen to the overview or read the title and skip to the end without reading the in-betweens and / or the fine print.  This practice of not taking the time to review what is included in those contracts, has cost thousands of dollars to persons in lost time, bad deal making, law suits and countless other headaches that could easily be avoided, just by taking the time to read down the page a bit or asking a professional about the parameters you may not understand.  A contract, stated simply is a legal binding agreement, in some cases verbal applies to binding as well, in this article we will overview what a contract is, why it is important to read thoroughly what you are about to agree upon as well as cite some examples of what bad contracts potentially have in store for the unaware.

            Our journey to help reach a greater level of understanding begins with a search through the Cornell University Law Library, which states that a Contract is an agreement which is enforceable by law, or more simply a promise that the law will enforce.  A contract is formed when two or more people or businesses, usually of sound mind or business minded stature, reach an agreement to mutually provide either a service or good in exchange for money or the benefits of sales or use of those goods, in a fair compensatory environment.  For example, when a person is asked to work for a set period of time for a set rate of payment and that person agrees to provide a service in lieu of receipt of that pay, they have entered into a contract. In certain cases, depending on parameters involved or higher money amounts, written contracts are the preferred standard versus a verbal agreement as there may be deductions of taxes or benefit payments or some other parameter of financial or other interest.
English: Implied-contracts exception to at-wil...
English: Implied-contracts exception to at-will employment. Blue states have no such exception; red states have some implied-contract exception. (Photo credit: Wikipedia)

            Contracts are mainly governed by common, state or private law and those laws protect persons who may have been affected by a breach of those contracts, including who to contact, what to do when you feel wronged (in some cases may require a private lawyer), penalties that can be assessed to the violator of the contracted terms as well as others.  Examples of breaching damages that can be asked include: general, consequential and reliance relief as well as “specific performance”.  Each having their own parameter, such as in general damage relief according to Nolo’s Plain English Law Dictionary, it involves monetary recovery in a lawsuit for which there is no exact dollar value that can be calculated.  For example, general damages could include pain and suffering, compensation for a shortened expectancy of life or losing someone.

            This is different from Reliance, which by definition states: Damages awarded for losses suffered in reasonable reliance on a promise and usually these damages are calculated based on what it would take to restore the injured persons to the economic positions they occupied before they acted in reasonable reliance on the promise.  A possible example would be our contracted person, who works for a reasonable amount of time within the contracted parameter and does not receive the proper compensation due to neglect, absence of contact with the “contractee” without reasonable explanation of absence or some other parameter preventing the contracted person from being compensated based on contract.  In both of these cases, a breach or violation of the terms of the contract had to take place in order for there to be cause to pursue damages and in each case whether or not to approach your local labor board, Human Resource person or Federal office should be considered first.
GTRLC Contract Signing - March 2011
GTRLC Contract Signing - March 2011 (Photo credit: msulibrary1)

            We can easily see from example how important paying attention may be when entering into a contract and that contracts become legally binding when 2 or more persons are in agreement with those terms.  Contracts can be either verbal or written and both are equal in weighted measure when in dispute and as with any agreements, some disputes will arise.  Contracts do not have to be for labor purposes solely, other examples of contracts could be the paperwork you sign when activating a checking or savings account, meaning you will adhere to the guidelines set forth by the bank and they in turn will adhere to those as well, including your responsibility to notify the bank in the event an dispute arises in a reasonable amount of time.  This author became very aware of that fact when I banked with a prior institution that applied deductions to my account before deposits and on one week in particular, initially cost me well over 200 dollars in returned check fees.  Once I petitioned the bank and pointed out in their fine print some of the parameters that were not met, those charges were refunded to me, with a fee deducted from them (also in fine print) and subsequently once the proverbial dust had settled, I took up banking with a different institution, this time reading the entire set of documents when I signed up. 

            The fine print in a contract or agreement is usually what nets the most red tape or legal jargon and most persons due to this legal jargon, skip past the print, get the gist of the document and sign it without hesitation and yes in our electronic age a digital signature is as valid as if you were standing in an human resource office and writing it on the paper.  Credit cards are no different in their “terms of use and agreements”, when the citizen says yes, I would like that card, they become subject to the fine print, upon their approval.  According to an online article, this fine print accounts for a majority of the overdraft fees, late fees, annual fees and other monetary items that when the consumer receives their bill, that 100 dollar payment becomes several hundred and the consumer is stuck without an escape, unless the company made a grave error in application of their own parameters.  When surveyed, some staggering statistics came to light, such as 33% of consumers did not understand the jargon in the fine print, 20% couldn’t find critical terms (or couldn’t recognize them), 44% did not know their own annual percentage rates (in some cases those could be as high as 25%), 20% had no idea of their limits and 70% were not aware of default policies this due to NOT reading the items contained in their “contracts” or agreements with the financial institution.  Student loans are no different; some loan agencies include in the fine print that your loan may be sold off after a period of time and become subject to the new institutions rates, payment options and other terms, no wonder college is so expensive!
Artist contract: XYNN Multimedia-Show, Town of...
Artist contract: XYNN Multimedia-Show, Town of Munich (Photo credit: Wikipedia)

            To agree or not to agree, that is the question that should be overviewed with meticulous care when considering any contract.  Most contracts are written in favor of those who generate that contract and in their fine print, if one is not careful, they could become subject to provisions that close gaps and freeze or penalize citizens for errors, even simple ones.  If you are the contractor or contractee be certain that all things that you have concerns over are addressed and if you are the consumer, beware of those snazzy lingo’s of “zero percent interest” or “low annual percentage rate” sometimes in the fine print, those governances can become subject to change, without notice if the lingo or jargon is overlooked and the person is unaware or unsure.  Legal and Professional assistance is available for all consumers as well as employers (yes the IRS does define what a contracted employee is) and laws protecting citizens also help when disputes or questions arise.  Remember in all of these items, the fine print is where the meat of the matter is and if you don’t read it, without a doubt, it will matter when in dispute.

Reference and Readings

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