Tag Archives: duty to read

If You Write “Flounder” on the Contract’s Signature Line, Are You Scrod?

For the uninformed, I note merriam-webster.com defines scrod as “a young fish (as a cod or haddock)”.

We voyage to the Southern District of New York for this yarn. An employee having an employment agreement is pressured to amend the agreement. He is found to have written “flounder” on the amended terms and and returned them. Does this manifest assent?

I cannot have made this up. It’s from Random Ventures, Inc. v. Advanced Armament Corp., No. 12 Civ. 6792(KBF), 2014 WL 113745 (S.D.N.Y. Jan. 13, 2014). Here’s what one Judge Forrest, formerly a partner at the Cravath firm, writes about the matter:

Brittingham consistently refused to execute his amended EA—which, based on the factual record and as explained in more detail below, was closer to an $8 million hold-up than a mutually agreed upon deal.44 While a copy of the amended EA was eventually faxed by Thompson to Cofield, Brittingham had never signed it; instead, it had the word “flounder” scribbled on the last page in the signature block. (PX 126.) At trial, Brittingham denied having written the word “flounder,” but the Court found this testimony lacking credibility. (Tr. 460–61.) The Court did find credible, however, his testimony that he intentionally did not sign his name to the amended EA and that, in his view, he never entered into the agreement. (Tr. 462–64.) As a sophisticated counter-party, Remington could not reasonably have been duped into believing Brittingham had adequately executed the proposed amended EA based on the scribbling on the last page.

As one might expect, the opinion goes on to address whether there had been assent by conduct. The opinion is quite long–too long to summarize here.

There is a difficult line to be drawn between the so-called “duty to read” and actions that are constructively fraudulent. Illustrative of the latter camp is Hand v. Dayton-Hudson, 775 F.2d 757 (6th Cir. 1985).  There the court reformed a release signed by an employee in connection with receipt of a severance payment.  The employee re-typed a form the employer provided, to appear superficially identical to the form the employer proffered, but in a few words limiting the scope of the form release.  The appellate court affirmed the trial courts reforming the release described by the appellate court as having been fraudulently altered.

I must say that I am not particularly a fan of much of the authority applying the “duty to read”. It’s often applied in contexts where one is seeking to obtain assent in contexts where it is not knowing and voluntary. So, here we have a case going the other way. The employer is “hooked” by the principle employers often use themselves. Or is it “foul” hooked?

Keeping Contract Benefits Without Ratification? American Burglary & Fire, Inc. v. Aspect Software, Inc.

Here we have an interesting argument:

Does ratification arise from acceptance of benefits under a contract, and performing duties under a contract, where the putatively ratifying party is not aware of all the terms?

American Burglary & Fire, Inc. v. Aspect Software, Inc. (E.D. Mo. No. 99472), involves a contract to monitor fire and burglar alarm system.  Pertinent facts referenced in the respondent’s (Aspect’s) brief may be summarized:

Evidently ABF had installed a system on buildings owned by Quilogy. Aspect acquired the buildings “as part of a merger transaction” in January 2010.  Contracts dated May 2010 concerning ongoing monitoring at the building were signed by ABF and, purportedly on behalf of Aspect by one Buxton, who had been an employee of Quilogy but had no authority to act on behalf of Aspect.

Buxton was described in appellant’s brief as one who had been the “building supervisor at Quilogy”.  Appellant’s brief goes on to note:

According to the testimony of Bob Nagy, corporate controller for ABF, ABF sent over salesman Greg King to execute a new sales contract with Aspect.  Larry Buxton, the building supervisor at Quilogy, signed the original contract with ABF.  When Mr. King went to Aspect to execute a new sales contract, Larry Buxton was on site and signed the contracts dated May 27, 2010, for the monitoring and servicing of Aspect’s businesses….  Gene Butcher, [Aspect’s] witness, admitted to being present for the signing of the ABF contracts and asking that the billing be changed to Aspect Software and not Quilogy.

It appears Aspect used the services from ABF until some time during or after August 2010.  Respondent’s brief notes that in 2010, “Aspect had a Hirsch Electronics’ alarm system installed … and, at that time, stopped using the ABF alarm system and started paying Hirsch Electronics for its alarm monitoring services.”  The brief indicates payments to ABF continued until May 2011, but then discontinued payments.

One could examine the issue of apparent authority.  One of this author’s favorite illustrations of apparent authority is referenced in Kanelles v. Locke, 1919 WL 922 (Ohio App) (quoting Curtis v. Murphy, 22 N.W. 825 (Wisc. 1885):

A traveler who goes to a hotel at night and finds a clerk in charge of the office, assigning rooms, etc., has the right to assume that such clerk represents the proprietor and has authority to take charge of money which may be handed him for safe-keeping.

It would seem clearly not thoughtful to maintain on-premises one who had formerly made arrangements for the owner and not clarify to those with whom the former agent had contracted the termination of authority.  The analogy is not putting some new, unauthorized person behind the counter at the hotel.  It’s change of ownership of the hotel, allowing the clerk to stay behind the counter but claiming the clerk’s authority has terminated.

Ratification

But we will turn to the examination of ratification, discussed in only cursory terms by respondent.  Here is the part of respondent Aspect’s brief concerning whether it ratified the contract:

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Why Not a Duty to Read One’s Own Form? Woods of Somerset, LLC v. Developers Surety & Indemnity Co.

The typical case of a dispute as to an adhesion contract involves claims literal terms should not be binding on the recipient of the supplied form. A court may recite the bromide that one has a duty to read the contracts one signs.  Well, should not the party who is responsible for the form take responsibility for its own failure to read or understand its  own form?  In this man-bites-dog category falls Woods of Somerset, LLC v. Developers Surety & Indemnity Co., 2013 WL 5311922 (Mo. App. W.D. 2013).


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