Understanding every detail is critical in contract law

A lawyer can sieve the legal jargon in the contract, making sure you are not blind-sidded. PHOTO | FOTOSEARCH 

By CATHY MPUTHIA

In Summary

• Once the dotted line is signed a party bounds himself to the other and it is difficult to extricate oneself.

An inquiry came from a reader of this column and he sought my advice on a piece of property he wanted to buy. He wanted to buy an apartment off a large scale development of 200 units.

He was presented with transactional documents which included a sale agreement. He forwarded to me a copy of the agreement to review and ascertain if it protects his interests as a buyer.

In my view, the document was too rigid, one- sided and exposed the reader to a high default risk. I gave him my comments with several amendments to the draft presented to me for review.

To our surprise, the developer flatly refused to amend any term of the agreement and curtly said that the agreement constituted “standard documents” which were used by all buyers.

The reader really wanted the apartment and against my advice he signed the agreement as it was. The agreement was too one-sided but was very favorable to the seller. It had non-indemnity clauses and liability exemptions.

However in everyday life, we encounter “standard documents” a lot, for example when subscribing to banking services.

One is presented with a standard document and asked to sign the dotted line. How many people read through and understand the terms of the so called “standard document” before signing?

Standard forms are used in mass supply of services/products where it would be difficult for a contracting party to negotiate with each and every subscriber.

However subscribers should understand that once they sign the dotted line, they have bound themselves to terms of the supplier.

In contract law there is a doctrine known as “meeting of the minds.” This means that there should be a mutual understanding regarding the intent of the parties when entering the contract.

It should be clear that the two contractees have clearly understood what they got into. The court in ascertaining understanding will look at the ordinary meanings of words.

There should be no ambiguity in the meanings of words and the court will apply the principle of interpretation of words in ascertaining the meaning. Do not sign anything you are not sure of. It is okay to ask for explanation.

At times two parties can make a mistake in the contract, for example where you wrongly misquote the land reference number or get the identity of the parties wrong.

In that event then the law allows both parties to cancel the contract. However where it is one of the parties who made the mistake then the contract cannot be cancelled unless the other party agrees to such cancellation.

Therefore my advice to you is that you should go through contracts well to ensure that you are not mistaken about any material terms of the contract