Return to Author Return to Main PageThis article is one that I feel is of great importance and should strike a chord with everyone one way or another. This article discusses some of my observations over the years listening to the potential traps clients had found them self in due to signing unread or open ended contracts. Contracts are here to stay so their is nothing we can do about that, yet how we approach contracts and reach agreements prior to signing are immensely important and should not be taken lightly.
Firstly, Let me say prior to launching into the body of this article that I am not a lawyer, nor is my profession within the legal field. However over the years I have seen enough people caught up in contractual issues which had very disturbing outcomes. The issue of people signing release of information agreements without fully understanding how the information may be used is an issue I find very disturbing, and is something that really needs to be taken more seriously. Especially when the information people tend to waive their privacy rights did not expect their information to be used like a weapon to attack them.
The primary issue with contracts is that most people don’t bother to read them to their fullest extent. Their may be several reasons this may occur, for example:
Even though the above reasons may appear to be plausible excuses for not reading a contract, the reality is their is just no acceptable reason to ignore reading contracts in full. Failure to do so is likely to seriously disadvantage you at a later date should you need to terminate the contract.
I hold the belief if any person who signs an unread contract with the intention to gain benefit or thinking they have outsmarted a system, only to later discover the contract was favorable for the other side really has no excuse to plead innocent. At the end of the day, people should only sign a contract when and only when they understand the terms and conditions in full. Granted this may sound like a pretty harsh comment to make, however I’ve generally come to the conclusion people will often sign things if they hold the belief the contract is in their favour and dismiss all other possible negative outcomes in the contract as if they would never happen. Like rats jumping a sinking ship, the signee may sign thinking they are in a better position, only to find their situation was made worse by the new contract. Especially when that favourable position changes and the contract moves against the signee, you will hear the signee squealing like a pig down the hallway claiming they were hard done by. I have absolutely no sympathy for people who lie in order to get a new contract. Especially for those who sign housing agreements under false pretenses with their lies to deceive housing loan applications indicating they have more money, or earn more money just to get a loan so they can appease their immediate desire to own a house. Only later to find the interest rates move up slightly and that person can no longer pay the loan accordingly, all because the signee lied on the forms. The old fashion rule, ”if you cant afford it, then don’t buy it” applies here which is something commercialism and marketing has always tried ever so desperately to remove from the forefront of our minds with the advent of credit cards, loans and the like. At the end of the day, we must accept responsibility for our own actions and not use excuses when the wind changes against us. Especially if we have attempted to reap a gain through deceptive means. If you sign, you agree and should be held accountable it is really that simple.
Contracts can come in various different formats:
Verbal agreements are as the title suggests, a spoken agreement like the typical “hand shake agreement”. Their is no paperwork to review and no signature to provide, in fact the verbal agreement like the mutual hand shake could be classified as the signature on the dotted line. The problem with verbal agreements is they are subject to change at any time and their is no reference paperwork to review the initial agreement during times on conflict. The verbal agreement quickly becomes a situation where “he said, she said” which is often seen for example when people try to contest a will. Another issue regarding verbal agreements is the increased possibility of two or more people misinterpreting what is being said and agreed too during the conversation. Overall, one should always remember in a court room, a verbal agreement is unlikely to be substantiated, thus not likely to stand in the court room.
Verbally Interpreted contracts are when the party who is providing the contract verbally conveys the contract to the signee prior to signing. This type of conveying a contract is laced with potential disadvantages predominantly for the signee which can be seen in this comical advertisement of the lady accepting what was told to her instead of reading the contract her self. If the person reading the contract does not read word for word and instead summarises the text by verbally explaining the contract in laymans terms, it’s possible the real meaning of the contract is changed. Thus the signee may be agreeing to something that is very different to what is actually written. This means the signee is ultimately signing a contract in good faith that it was verbally spoken correctly. However in the event their is a discrepancy between verbal and written, the court is likely to uphold the written contract that was signed. Pleading ignorance will be difficult as the signature on the paperwork is reflecting understanding and agreeing to the terms and conditions on that paper. Verbally interpreted agreements are commonly used to explain contracts to illiterate persons or persons who don’t understand the language the contract is written in.
Lets use a basic workplace agreement clause example: “You are entitled to have 14 days sick leave annually, however on every occasion you are having a day off a doctors certificate must be provided. Failure to provide a doctors certificate for each day you are sick will void sick leave entitlements for each day you have not provided a doctor certificate“. Now imagine a person reading this out verbally who summarised this paragraph in a simplified manner to a person who has difficulty reading the contract before they sign. The person reading the contract says “If you are sick just get a doctors certificate and you will be covered” or “if you are sick make sure you get a doctors certificate to receive the sick leave entitlement.” As we can see both of these verbal explanations can mean very different things if compared to the actual written contractual agreement. In both verbal explanations, they do not place emphasis that each day off from work a doctor certificate is needed, and if you don’t provide this you will not get paid your sick leave entitlements.
The issue with verbally interpreted contracts and taking “in good faith” is the signee will never know the true intentions of a contract. Simply assuming a contract is just, fair and verbally explained correctly may see the signee seriously disadvantaged when the contract is unintentionally breached. Therefore we can say the written formal legal contract states the accurate contractual guidelines, while the verbally interpreted methods can accidentally change the goal posts causing a different understanding of the contractual expectations.
Written Formal Legal Contracts (WFLC) are the pinnacle of all agreements because the text identifies the contractual conditions the parties will bind themselves too aka “Legally Binding”. Unlike Verbal agreements, a (WFLC) will provide both parties with copies of the signed documents in which either parties may refer to at a later date. Both parties are expected to read, understand and if agreed too, sign the paperwork to acknowledge they wish to be legally binded to the conditions set out in the contractual document. In the event of future legal challenges or breaches of contract, the court will refer too and make its decision based on the (WFLC). The downside of a (WFLC) is they tend to be quite lengthy and lawyers may used obscure words the average person may not understand. Both length, complexity of obscure wording are typically the most common reasons why people do not bother to read a (WFLC) in full.
The information age has also brought with it the Electronic Mutually Agreed Contract (EMAC). The (EMAC) as I call it is seen via emails, PDF, Word processor documents and the most recent additions are the contracts attached to software especially those handy little phone applications (apps) we just all love to download and install.
So the method in the past was to attach a mega long terms and conditions prior to registering the product. The individual is left in a quagmire after purchasing or downloading the desired software, do they agree with the (EMAC) or do they not agree with the (EMAC). If the user choses not to agree with the (EMAC) the user is typically not permitted to continue with the software installation. A person may wish to play their game or use the computer software as soon as possible, thus delaying gratification takes a backseat and the software user would generally accept the terms and conditions without reading the contract at all. This was evaluated previously, via an experiment where people had unknowingly sold their own souls to install and access a computer game.
As we can see in the above example, the individual somewhat has a imaginary gun held to their head. After all the person wants to use the software they have just acquired which is where the issue is with (EMAC). Instead of reading the contract in detail, most people just fast forward to the accept button without reading the contract because 1) the user is excited to use the software as soon as possible and 2) most already know if they don’t agree with the (EMAC) they will be prevented to use the software. So what the hell, just accept it and move on as they say. “I don’t think so Tim”. Mobile phone App “Meetme” is just one of many social media phone apps people may download, install and use by clicking accept without reading the contract in full. In the “Meetme” contract their is an interesting clause under “Safety and Security”. The clause effectively makes reference to the ability and reserving the right to undertake criminal record checks with it’s app users. So if we just digest this clause alone what could this mean? All face photos, all meta data contained in photos, all GPS data locations, all text messages, voice, video etc could theoretically be used to compile a profile of the app user in order to conduct a criminal record check. The criminal record check in relation to the social media is extreme, unwarranted and has no plausible legal requirement, especially as they are not even a law enforcement or government entity. The elephant in the room is if this was the case, how is the information securely stored, used and disposed of and then what is done with this information. As we can see, simply clicking agree or OK without reading contracts regardless of reasons can see us all forfeiting our own rights which may be against our own personal interests.
Never sign contracts without the full details in your possession. What a person says they will do and what is done in reality can be two very different things. After all, as the saying goes “The devil’s in the detail”. Signing contracts without all of the relevant information may be the start of a very bad ending. Thus difficulties such as what is initially signed for without reading the full details may see the signee agreeing to terms which are incongruent to once initially thought. For example, by signing forms with only half of the documentation present permits the possibility additional information is inserted into the agreement in which the signee may not have agreed with.
It is best practice never to feel rushed to sign a contract. In some cases you may be able to take the contract home and review the contract in your own time before signing. Otherwise, request a time set aside for you to comfortably read the contract in your own time so you understand the terms your agreeing too before putting pen to paper. If the person who offers the contract rushes you or places pressure for you to sign, It is always best to abstain from signing in order to protect your self until you have adequate time to review the documents. It is also important to know if any “Cooling off” periods apply to the contract. A cooling off period is a period of time that is allowed for the contract to be rescinded.
The reason you should always ask for copies of each contract you sign is for you to be able to refer to the documentation later. E.g if you wish to resign from an employment position, if you are receiving a reprimand, likewise if you wish to cancel a contract for housing rental, mobile phone plan, Internet plan, car loans etc you will always need to refer to the contract to establish the correct way to exit the contract without disadvantaging your self i.e receiving any financial penalty.
An interesting trap to be mindful of when canceling mobile contracts prior to the end of contract may result in the phone owner being hit with a cancellation and Admin fee. Another typical fee is paying off a car loan earlier than the end period already stipulated on the contract. Some banks will charge a standard fee, others may even require a certain percentage of the last payment e.g if your paying $5000 as a one off final payment, and the contract states if you pay the loan off early you would incur a 10% fee. This would result in you being hit with an additional $500. Thus that last payment has changed from the original $5000 to $5500.
The signee should feel free not to sign or agree to any contract they are not comfortable with regardless of the pressures they may feel obligated to sign. Especially because your signature is the equivalent to making a pack with the devil. One could and should always request the contract to be altered prior to signing if the signee is not happy with the contract. Walking away from a bad contract will save you far less hurt in the long run than conceding and signing it to only regret signing that bad contract which backfires on you.
While this article has focused on the concept contracts are usually long, we must also not forget basic release of information and other short forms that require signatures are also contracts in nature. A reasonably common short type of contract are “Release of Information” which are often used by organisations, medical centres, hospitals, businesses, other professionals and the like. A nice example are those confidentiality / release of information paperwork handed for you to sign. If used correctly the release of information paperwork will guard the signee by binding the organisation to be precise when, how and who your information should be shared with.
In Australia you are always free to refuse to sign, to change, to terminate or even set a end date that would see all permissions on the forms are revoked (expired). The overall problem I have noticed with these types of short forms is they tend to be broad and overreaching. This is not done by mistake, it saves the organisation time and serves to protect the organisation from making mistakes. However this should never be your concern if you are the signee, ALWAYS be specific with who you will grant your information to be released too. I seriously can not place enough emphasis this! This is so important to understand and remember because the failure to notice the difference between a broad and over reaching verses a narrow and specific release of information paperwork makes a world of difference. I’ll demonstrate via the below two release of information examples: (1) Broad v (2) Narrow:
I Herby grant permission to Company XXXXX to release my information too the follow people:
I Herby grant permission to Company XXXXX to release my information too the follow people:
This release of information consent form will expire on the 01/06/2018
As we can see the difference regarding how information is released between examples (1) and (2) are very different. With example (2), we have narrowed down precisely who the information is to be released right down to a specific person, and the form has an expiry date attached which can otherwise be known as a “Sunset Clause”. For example in (1) anyone from the business could theoretically ask and receive your personal information and because their is no expiry date on the form, it is up to the signee to manually request to revoke the initial permission to release the information. Let’s face it, how many of you would remember to go back to revoke a release of information consent form at a later date say 12 months from now? This is why expiry dates are so important to incorporate at the very beginning of the forms you are signing. In doing so, it protects the signee in case they forget to make the necessary changes to revoke permission. It was not uncommon in my private practice to receive insurance company file requests with a consent form dated 6-9 months old from when the client had signed. Professionally speaking, in 6-9 months anything can change, perhaps the client has a disagreement with the insurance company and no longer wishes that insurance company to represent them or proceed with acquiring the information, perhaps the client changes insurance company or legal firms. The possibilities of misinterpretation of the requests are endless without an expiry date.
While in example (2), only one person has been limited to accessing the personal information. In the event that any other person apart from than those listed in (2) were to be issued with the personal information, it would be deemed as unlawful by Australian legal standards. As mentioned previously, with (1) many of these broad release of information forms are typically given to people to sign and my advice is NEVER sign a broad form or contract etc. Historically speaking, I had applied for a job who had issued me with a release of information consent form which requested over reaching access to medical records and all medical history. On this form I had manually entered a 6 week expiry date and restricted the access to relevant to the job title itself. I was queried to what I was hiding. My response was that I was not hiding anything (and I wasn’t), however I did not believe in unfettered access to unrelated medical information for the job was reasonable. For example, any illness that I may have experienced some 20 years ago which is not relevant now because I am in good health could potentially alienate me in the job application. The change I inserted was “The above listed consent shall expire on the {date}, where such access to my personal practitioner health records extends only to specify information regarded for the employment positions {job title}. Please feel free to contact me if an expiry date extension is required” As you can see all I had done with this additional document entry is specifying an end date which is closing gaps and protecting me of future potential abuse, I have also granted extension however further confirmation would need to be sought by the employer
Their were several reasons for my addition the changes to the document prior to signing. Firstly when any organisation accesses your information, they keep that information on file and it’s another additional avenue that insurance or other legal entities can access via subpoena. Secondly if the organisation uses third parties to process your information, we just don’t know what happens with your information. Perhaps the third party organisation has a disgruntled staff member, then what? For me personally I don’t care what restrictions and contracts the primary organisation has in place with third parties. As far as I am concerned it is just another party that has access to personal information, just another chance for something to go wrong and your the victim of a privacy breach just like what occured at a NSW hospital where client files were found in a Sydney bin and whats worse it seems in some instances clients were reportedly not even informed when any privacy breach had occurred.
My third reason is that I don’t believe unfettered access without a sunset clause is reasonable. The reason being is by allowing free access without a sunset clause means the employer can always have access to your medical records during the time of employment when realistically speaking it is not needed. A good example could be, lets say that you chose to have a pregnancy termination 9 months into your employment. Now because their was no sunset clause in place the release of information form you signed in the job interview, it would still be considered a lawful action on the employers behalf to access your file at any time and during their late check accidentally discover of your pregnancy termination. Perhaps the staff are incompetent and what checks should have been done at the point of employment was forgotten, thus 9 months into employment a check was then sought without you knowing. Believe you, this is not uncommon for incompetent staff to fall back on their duties. The fourth issue is an issue that most people wouldn’t even consider, and that is most wouldn’t even know what is listed in their medical file. Thus the fact you may have forgotten to disclose a medical condition may see your employment in jeopardy if the employer chooses to invoke “failure to disclose accurate information”.
At the end of the day, I don’t have an issue with an employer obtaining my medical records if the need arises during the course of employment interview. However I want to know when, how, what information, for what purpose, what will be done with the information, how will my information be securely disposed, how long will my information be maintained and of course how will my information be stored and will my information be securely disposed of. Lets face it, these questions tend to overwhelm most employees as they tend to feel they have the upper hand and a sense of entitlement to your records without even considering the various possible ramifications. Although the reality is that just because you are going for a job or signing any other contract for that matter, you have absolute right to who you release your personal information and the conditions you wish to apply for such actions to occur. If you find what I am discussing over the top, then I urge you to ask your lawyer would they sign an open ended contract or consent form. I would be surprised if you find any legal professional that would ever do such a thing, so why would you ignore that?
One of the comical things about this issue of being mindful what you sign, is those persons who had many run ins with the law i.e criminals coming out from jail and being supervised by corrective services are issued forms with expiry sunset clauses. I have always found it fascinating why is it that professionals and other members of the public don’t protect themselves and are open to sign open ended contracts? Actually, the answer to this question is those who have extensive dealings with the wrong side of the law understand all to well just how easy it is for unrelated information from two separate events can be packaged as a weapon and used against them. The person who has a forensic background is usually very cautious who they will release their information too and are pretty quick to know their legal rights.
Their are literally a myriad of reasons to why people may offer open end contracts, perhaps the HR person wants an open contract which permits additional access to files without the need to confirm with the employee, perhaps the HR person making this form was incompetent in the design of the form. Or perhaps the HR department was advised by a lawyer to leave open ended contracts so in the event of employee issues in the future, full access could occur at a later date to support their claims of dismissal. After all, any form that is signed and is still a legal document.
In most situations, it is about understanding your rights as an individual. Here is a link to the Australian National Employments Standards https://www.fairwork.gov.au/employee-entitlements/national-employment-standards . The most important thing to remember here is that employment contracts can not apply if they set out requirements less than specified here. Additionaly here is the latest 1st may 2017 Australian Fairwork act https://www.legislation.gov.au/Series/C2009A00028
This article has sought to explore the issue regarding the many people out there who do not read contracts prior to signing or accepting the terms and conditions without carefully examining the contracts contents. While discussing the various types of contracts, the over bearing point to remember is to please consider the issue is not whether an entity would or would not seek overreach in any contract, the issue is that overreach must not be their in the first place. We are after rock solid contracts, something easy to read and understand. If you don’t under stand the contract then definitely DON’T sign it unless amendments are entered into the contract the way you like. Often people may let their desires run wild and sign contracts when the contract was not read through it’s entirety. If this is the case, this will be your fault for rushing into a contract without taking any precautions. If you are in any doubt with a contract, then please consult your legal representative who will under stand the contract and explain to you in a way that you will understand what you are signing. And above all, watch those sunset clauses in your release of information forms, they will protect you when you don’t remember to protect yourself.
Until next time...
Darren Hamburger
Page Last update:24/12/2017
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