I recently received a phone call from my cousin who had been in a car accident while driving a rental car. He was concerned because, although the accident was the other driver’s fault, the rental car company was requiring him to pay for the repairs. One of the first questions he asked me was whether he had to pay for the damage. My answer to him was “it depends on the contract you signed.” As it turned out, the rental contract contained a provision requiring the renter to ultimately be responsible for any damage to the car while it was in his possession. So although the other driver (and his insurance company) would be required to pay for the damage, my cousin was responsible for ensuring the damage was repaired regardless of whether the other driver ended up paying or not.
With few exceptions, the laws in the United States are set up to support the rights of individuals to conduct business with one another and to negotiate the terms freely. These terms are typically spelled out in a written contract that is signed. Contracts are an objective way of articulating the understanding, expectations, and commitments of all parties involved in a transaction. For that reason, when a dispute between two parties goes to litigation, the court will generally focus on what is contained within the four corners of the contract. In other words, the terms of the contract determine the rules by which the parties are supposed to play, even if one of the parties chose to sign the agreement without reading it in its entirety. And if you think about it, that only makes sense. If it were any other way, how could anyone depend on a written contract?
For these reasons, always, always, always read the fine print completely before you sign any contract, even if you think you know what it says. This is one lesson you don’t want to learn the hard way.
Wade Hardie, JD, MBA
MINES Corporate Counsel