November 11, 2021

Signing in a rush? Don't forget to read the contract!

Sometimes you are so overwhelmed with excitement to enter into that new cellphone contract or to finally sign that agreement to your new home or car, you merely glance over the contract and continue to sign it without knowing about all the terms and conditions. You take for granted that what you have discussed with the other party is exactly what is included in the contract. It is only when an issue arises later on that you realise: ”Oops, I wasn't aware of that.”

Unfortunately, you cannot rely on “not knowing about a term and condition” as a defence. When you sign the contract, it generally means that you agree to the contents of the contract, regardless of whether you read it or not. This article will highlight some important aspects you should take note of before signing a contract.

Remember the following when signing a contract:

When you are initially presented with the contract, the first thing you should do is to read the contents of the contract and ensure that you understand what exactly you are agreeing to.  Ask questions and obtain clarity if you are not sure about something. You can also propose changes where necessary, for example, to adjust the payment methods and so on. This is your chance to discuss exactly what you want and you should take full advantage of this to ensure you are entering into a contract based on what you exactly require. These discussions are known as negotiating the terms and conditions in the contract. You should keep in mind that both parties must be in agreement with any changes and that neither party can force the other to sign a contract.

Ensure you are familiar with the parties in the contract and who will provide the services or goods agreed to in the contract. For example, you may think the services will be provided by the service provider, but upon reading the contract you find that the services will be outsourced to another service provider.

Be sure to fill in all the blanks in a contract and to scratch out any parts that are not applicable. Also remember to initial next to any changes made in the contract. This will prevent the blanks being completed at a later stage to contain information that is incorrect or which you have not agreed to. Any changes made must be initialed so that changes cannot be made thereafter without your consent or knowledge.

Take careful note of the rights and responsibilities of each party, for example, who must do what (like payments or repairs to a home), when it must be done and so on. Rights and responsibilities generally appear throughout the contract and it is important to read the entire contract carefully to be fully aware of what is expected of you and what you can expect from the other party.

Ensure that your personal information will be handled in compliance with The Protection of Personal Information Act (“POPI”). Sometimes the other party will have access to some of your personal information (such as contact details, financial statements and so on) and it is important to ensure that such information is handled in a secure manner and is used for a specific purpose and with your full knowledge and permission.

Pay special attention to risk and liability in the contract. This is one of the most important clauses and deals with who is liable when damages occur from the contract, for example, who will be liable for damages if a phone breaks in a cellphone contract, or if someone gets injured during a building contract. Risk and liability can be explained anywhere in the contract, but is often under the headings of “Liability” or “Indemnity”. Ideally, each party should be liable for the damages caused by themselves and not if the damages are caused by someone else. It is important to carefully consider these clauses and request clarity or legal advice when you are not sure. 

Think ahead when entering into a contract:

When you enter into a contract, you do not already want to think about or discuss scenarios of what could go wrong at a later stage, such as what will happen if either party is unable to fulfil one or more of the terms and conditions. For example, if one party defaults (not make payment as supposed to) or something becomes impossible to perform (for example, delivery cannot take place due to a strike). 

If you think ahead, you can try and avoid disputes from occurring or include mechanisms in the contract on how to deal with these disputes. These mechanisms can include providing written notice that gives the other party a certain period to correct the dispute and to provide clarity on when you can cancel the contract.

Contracting via e-mail in the digital age:

Concluding contracts via e-mail has become common practice, especially during the Covid-19 pandemic. However, you still need to ensure that you carefully consider the contract you are entering into before placing your electronic signature on the document. The law requires that if a contract is sent by e-mail, it must have an electronic signature to show that the parties had the intention to enter into a binding contract. There are different types of electronic signatures, for example, the signature at the bottom of an e-mail, the “click to accept” function, a username and password combination, a digitised signature (handwritten signature that is put in an electronic form) and so on. The contract will be concluded when the other party receives the e-mail. But remember, a contract for the sale of immovable property and a Will may not be in an e-mail format.

Our lives are often fast paced and most of us are always in a rush. But let's be smart and take some time to read and understand what we are contracting into so that we don't find ourselves faced with confusion and unforeseen disputes in the future.

Did you know… If you sign a contract, you agree to the contents of the contract, regardless of whether you read it or not.