Most modern real estate deals and other contract signings are frantic and intimidating affairs. A person may be asked to sign dozens of documents that he has not had a chance to review. The documents contain hundreds of repetitive paragraphs printed in tiny font. There is no reason to “look for the fine print” because everything is fine print.

People are busy. The children can be sitting at the table or waiting in the nursery. The settlement officer may have three or four more closings that day. Documents may need to have some handwritten and initialed changes. Plus, most borrowers (or their spouses, children, or parents) really want that home, car, or business loan, so they’re either eager to sign or feel pressured to sign.

If, after the agreement, everything goes well, it is likely that no one will ever read these documents. But what if there is a default or dispute and the borrower does not want to be bound by the terms of the deal? Is there a loophole?

The likely answer is almost certainly that the borrower will keep the documents they signed. The universal rule is that a person executing a document is legally required to read it before executing it. In most states, a person’s signature does not even have to be legible and the person signing does not even have to be literate to be bound by an executed legal document. As long as the beneficiary of that document can prove that the person actually signed, the courts will enforce the document. If the person seeking to escape the deal claims to be illiterate, they will be deemed to have asked to have the document read to them before signing it.

Of course, there are defenses to written documents, although they are difficult to establish. The main defenses are fraud, coercion and mutual error.

Fraud

Many disgruntled borrowers try to claim that they were induced to sign by the other party’s promises that something other than what the documents provide would happen. This is an argument that almost always fails because most legal documents contain a integration clause also called a merger clause. According to Nolo.com:

This is a provision in a contract that states that the contract represents the complete and final agreement of the parties and supersedes any other agreement, oral or written, on the same subject matter. The purpose of a merger clause is to prevent one party from later claiming that what the parties actually agreed to was different from what was written in the contract.

Dissatisfied parties sometimes do better by claiming that they were fraudulently lured into signing a contract because the other party never intended to abide by the terms of the deal. This is more common in contracts for the supply of goods or services than in debtor/creditor transactions.

Fraudulent inducement is extremely difficult to prove because the disgruntled party needs to demonstrate a specific fraudulent intent in the other party. Fraud can be impossible to establish, especially when the other party is a lender who has fully performed at the beginning of the deal by advancing money and is now just waiting to be paid.

Coercion

To establish severity, one party must show that the other party made an unfair threat while the complaining party was overcome with fear and unable to exercise free will or judgment. This defense generally requires a person to show that they were physically bullied to sign a document. The claim that someone in breach of contract was forced to sign a settlement document because the lender threatened to foreclose on their house or sixteen of their bank accounts will almost never succeed if the other party was authorized by the contract or the law to take those steps. .

mutual mistake

An error is a mistake that causes one or both parties to enter into a contract without understanding the obligations or results. When only one party makes a mistake, it will usually be insufficient to deny the deal. However, when both parties make a mistake, this is the defense that is likely to allow one party to evade its obligations. The perfect example is when a contractor agrees to excavate a foundation for a fixed price, but it turns out that there is an unusually large rock in the ground that would require a much more expensive excavation process. Unless the contract specifically assigns that risk to one party or the other, the court can say that both parties erred as to the condition of the land and, therefore, the contractor is relieved of the contractor’s duties. Mistake is a very fact-intensive defense that will require a court to understand what both parties to the contract believed at the time the agreement was signed.

Contract defenses are difficult to prove. Even in the most confusing circumstances, a signed document will almost always stick with the court. That’s why it’s important to understand all the terms of anything you sign before you put the ink on the paper.