If you sign a contract that you do not know, is it valid?

If you sign a contract that you do not know, is it valid?

Among the civil cases I have dealt with, there is a case which I would consider it as very impressive. Perhaps even the lawyers and judges can’t tell the truth or falsehood of the case, and only the parties himself can tell the truth or falsehood of the case.

In this case, we are representing the Plaintiff. The facts of the case is that our client purchased a house with a market price of RM350k, and the owners of the house, who are husband and wife as the Defendants of the case have agreed to sell the house. Soon after that, both parties went to the lawyer’s office to sign the Sale and Purchase Agreement (SPA) at different occasions, and the lawyer witnessed the signing. However, one of the defendants (Husband) suggested to the Plaintiff that the house can be purchased with only RM180k via cash. Of course, our client who is the plaintiff under such a favorable temptation, paid the Defendants in RM180K cash. The two Defendants also signed a letter at the same time, acknowledging that they had received the RM180k, and this letter would supersede the previously signed SPA. After signing the letter, the transaction did not continue as the client could not locate the whereabouts of the husand. Hence the Plaintiff situation at that point of time is technically paying Rm180k and not receiving the property as promised. The Plaintiff then approached us to sue the other party and demand the other party to perform the transaction as agreed.

To be honest, when I first handled this case, I found that it was very difficult. The main problem is that the Plaintiff has no way to provide any proof of payment, except for the letter. According to the Plaintiff, the entire transaction was paid in cash.

In this case, although we initiate a lawsuit against the husband and wife, only the wife being the 2nd Defendant in the suit has appointed a lawyer to defend the suit, but as for the husband being the 1st Defendant, according to the wife, has been missing for many years. In her Statement of Defence, she stated that all the contracts and documents signed before were based on her husband’s instructions and guidance, and she was deceived by her husband saying that the documents they signed were to transfer the ownership of the house to their children. Although she argued that she did not understand the English terms in the contract, she did not provide any evidence why she still sign the contract although her children name is not stated (she could understand the English letters and simple English word of her children name). Under the cross-examination, she also admitted that she had not asked about the contents of the agreement before signing the contract.

In civil litigation, when a person states a statement for the court to believe, he must provide evidence to prove the truth of the matter, rather than relying on his own words to prove it. What’s more, our client clearly demonstrated all the documents (including signed sales and purchase agreements, letters, land transfer documents, MOT, etc.), but the second defendant was unable to refute. In such a situation, the court has no choice but to adopt a more reliable party version.

“To put it bluntly, the court cannot guarantee that the decisions it makes and what it believes are the facts; and the judgment that a judge can make can only rely on evidence and testimony.”

I always advise clients to put the contract in black and white, because if the agreement at that time is not written down, only the parties will know what happened at that time. When things evolve into a litigation case, the judge does not have a clear picture to determine or see through who is telling the truth and who is telling the lies.

In addition, in this case, the 2nd Defendant also put all responsibilities to her husband, saying that after he took all the money, he disappeared. In any case, we proved that she has acknowledged the letter and clearly stated that both of them have received the money.

This is a very basic legal knowledge that anyone who signs a contract is deemed as he agrees with the content stated in the contract, unless it is by way of threat or fraud. No one can argue that he signed the contract without reading the terms of the contract, hence the contract is invalid. From a legal point of view, signing a contract is like playing chess, once you made your movement of the chess piece it is deemed moved. If you say that the contract is invalid, you must prove that you were deceived or threatened during the signing process, rather than the other party proving that you understand the terms of the contract. In addition to deceptive or intimidating elements that will invalidate a contract, if the term in the contract violates the law or harm the public interest, then both parties will not be bound by the contract simply because the contract has no legal effect of binding them. A simple example is that if two people sign a contract, the terms in it are illegal, for example, to steal the company intellectual property, the contract cannot be enforced.

In this case, the negligence and failure of the second defendant are:

1)       She could not prove that his husband fled with the money because after her husband disappeared, she had never went to the police station to report the incident;

2)       When she received a letter from the lawyer’s office about the sale, she did not take any action to clarify that she did not want to sell the property (if she was really deceived);

3)       If she said that the transaction was fraudulent, she did not take immediate action, nor did she report the case to the police;

4)       Even if she really signed the contract without knowing the content of the contract, she did not ask the lawyer about the content of the contract before signing. To a large extent, she must take up the responsibility.

Legally, any adult can enter a contract. The meaning behind this is that the law believes that adults have their own judgment and vigilance; they understand what they have signed before signing a contract. If a person can use “don’t know what I sign” to escape the responsibility in the contract, then the author would definitely state that it will be more difficult to have trust between anyone. Without trust, many commercial businesses are definitely difficult to run and operate.

In this case, when I saw the 2nd defendant was giving her testimony and being cross examined by us, tears falling; to be honest, although my mood has been affected and have shaken a little bit; but I know and understand, the other party’s lawyer will do their best to present her version of story to the court.

In this case, the court ruled that our client was the victorious party (the defendant also lost the case after appealing to the high court). The main point of the closing statement accepted by the courts is that if an adult chooses to be careless and does not care about the document he/she signs, he/she must also bear the consequences at the same time instead of relying on the signed documents. The original English text is as follows:

“A person who choose to be careless, or not bothered to find out the contents therein, or relied completely upon others to complete the same, is responsible for his own actions and he is prevented from denying the contents therein do not bind him.”

Hence the summary of this is that before signing any document or contract, please read it carefully. If you really feel that there are too many clauses or too many documents, or you do not understand, please ask or engage a lawyer to read it for you. You should know, no one can force you to sign a contract; and once you signed it, you will be bound by the contents of the contract, and you can no longer find excuses to escape the responsibility. If you want to deny the legality of the contract because of laziness or too many words in it, and you signed the contract in a hurry; then I am sorry, the court cannot and will not lend you a helping hand.

BY WINSON TAN

Note: This article is for reference only and does not constitute legal advice. Therefore, if readers have any legal questions or needs, they should seek professional legal advice. If the reader suffers any loss by relying on this article, the author will not be held responsible.

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