Why You Need to Read the Fine Print: A Cautionary Tale
You know you should read “the fine print” of every contract and agreement you sign, but do you? We sometimes assume that there’s nothing truly important happening in the fine print, the section of a contract that’s characterized by small type and is often full of mind-numbing legalese , and so we don’t read it. We tend to trust that the person who wrote the contract is treating us fairly.
But that’s a mistake. Here’s a quick story that shows why you should always read the fine print.
What Was Buried in the Fine Print
This happened several years ago. Joe owned a piece of property that ran alongside a major road. Sam owned a billboard company and approached Joe about putting a billboard on the property. Sam would pay to construct it and would secure the advertisers; Joe didn’t have to do anything except let Sam put up the billboard and then collect a small amount of rent each month.
This arrangement worked perfectly for both parties – until Joe sold the property.
Joe sold the property to Harry, which included in it the lease for the billboard. What Harry and Joe didn’t realize was that the lease contained the following provision: Sam had the right of first refusal for any sale of the property by Joe. That is, Joe should have approached Sam first about the sale of the property rather than immediately selling it to Harry.
Sam seized the opportunity to demand that someone buy his right of first refusal for an astronomical fee. He sued both Joe and Harry for the money. He didn’t care who paid it, as long as he got paid.
Eventually the matter was settled out of court. Joe and Harry ended up paying a large amount of money to Sam. And Sam made a tidy sum for doing absolutely nothing.
How the Story Should Have Gone Instead
Here’s what should have happened to avoid this troubling situation:
Joe should have never signed the lease with the right of first refusal. He should have had an experienced commercial real estate attorney review the lease for him, or at the very least he should have read every word of it before signing.
Then Harry should have never bought the property with the billboard lease agreement as-is. He should have had an experienced commercial real estate attorney review the contracts for him, or at the very least he should have read every word of them before signing.
The solution is the same both times: read the fine print!
What You Can Do To Prevent Unwelcome Surprises
First of all, don’t assume that the contract you’re about to sign is written in a way that treats you fairly. People can be sneaky, and when it comes to contracts, you’ve got to look out for your own interests.
Then do what Joe and Harry should have done – read the fine print. If the print is literally too small for you to read, request that the contract be reprinted in a more legible font size and refuse to sign it until you are able to read every word. Once you’re able to read it, make sure you understand what it actually means, and what the consequences could be.
Even better than reading it yourself is having a lawyer review it for you.
If you need an experienced commercial real estate attorney to review contracts or give advice on a purchase or sale, contact Gem McDowell of Gem McDowell Law Group. Send us a message today at our Mount Pleasant office or call (843) 284-1021.