Multiple Page Contracts - Another Bad Idea - February 11, 2013-

Multiple Page Contracts - Another Bad Idea  

  February 11,  2013

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     If you're goal is to confuse your subscriber and most likely yourself, use a contract that does just that.  One good start is to use a multiple page contract that makes reference to other documents and attachments.  Paragraphs that cross reference and refer to other paragraphs is another great way to confuse everyone.  

The purpose of your contract is to set forth the understanding you have with your subscriber.  It should leave no room for ambiguity.  Confusing provisions will always be held against you.  

    An appellate court in California was confronted with whether it would enforce an arbitration clause in a contract.  The underlying issues in the case really involved the automatic renewal clause, class action suit, early termination and arbitration provision.   I've included an arbitration clause in our Standard Form Contracts.  While you have to be careful deciding whether to engage in arbitration [subject of another article] one reason for the provision is to avoid class actions against you,  That was the primary issue before the court in this CA case.  In this case the contract consisted of 6 separate documents.  The customer denied getting the page with the arbitration clause.  BTY, best example of multi page document contract is the AAA form.  If you can figure that out let me know.

    I had Gene Rosen, Esq., an attorney in my office that specializes in arbitration provisions and enforcement summarize the case.  Here's his summary:

    "A customer of a telecommunications company filed a class action lawsuit  against the telecommunications company seeking monetary and injunctive relief. The customer was subjected to an automatic renewal and forced to pay an early termination fee even though he followed the company's instructions for terminating the contract. The company tried to move the case to rbitration, which would have effectively stopped the class action.

    The motion to compel arbitration was denied because there was no valid agreement to arbitrate. The agreement between the parties consisted of a set of 6 documents. The document containing the arbitration provision was not signed by the customer. In fact, according to the customer's written declaration and deposition testimony, he did not even receive the document containing the arbitration provision when the agreement was made. The documents he did receive also made no reference to an arbitration provision being contained in any of the companion documents.

    The court ruled that the document containing the arbitration provision being attached to the customer's complaint as an exhibit was not a judicial admission that the customer agreed to the document's terms because he denied receiving it at the time the agreement was made and there was no evidence to suggest otherwise. The court also ruled that the customer's lawyer's statements during the oral argument of a motion could not be a judicial admission, especially if the comments would significantly harm the client's rights. Additionally, the court found that the customer was not trying to

enforce any rights under the agreement, and therefore was not constrained by its terms, including the arbitration provision."

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