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Signing a contract without reading and or understanding it – what are the implications?

This article deals with the written forms of contract, more specifically when one party tries to resile from (or get out of) a contract because he/she/it did not understand the contract’s terms or did not know that he/she/it was signing an actual contract. 
In South African law the principle Caveat Subscriptor – signor beware – applies.  This means that a party who signs a contract consents to be bound by its terms and conditions, irrespective if such party did not read the contract or understand its terms.   
The fact that you did not read the contract, did not understand its terms, or did not know what you were signing, is not an excuse which will help you escape the legal consequences of said contract. 
I refer to the case of Smit v Hughes where it was explained that: 
“If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party and that other party upon the belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms.”
There are of course defences which can be raised against the Caveat Subscriptor-rule.  These include the defences of Misrepresentation, Fraud, Duress, Undue Influence, Illegality and Mistake. The most common defence to the Caveat Subscriptor-rule is probably: Misrepresentation.  This is where one party submits that he/she/it acted on facts which were misrepresented by the other contracting party which resulted in the former party entering into the contract.  However, if negligence is established on the side of the party who wants to resile, such party will not be able to use a defence to the Caveat Subscriptor-rule. What I mean here is that there is still a responsibility on you to ensure that you read and understand what you are signing before you sign anything and that you should not just rely on what you are told you are signing by the other party.
Therefore – if you want to enter into a contract with anybody, make sure that you read the contract carefully and that you understand all of its terms.  Alternatively, it is best to seek the advice of an attorney so he/she can explain the terms of the contract to you.  In weighing up the expenses of this consultation, compared to the legal costs of going to court you will incur as a result of not understanding the terms of the contract, the consultation’s cost will be insignificant. 
Remember, knowledge is power and ignorance is not bliss.
Written by Talita Erasmus – a practising attorney at Alan José Incorporated.

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