Only 10% Read Contract Before Signing; Remainder Aren’t Smarter Than a 7th Grader

My law practice is dominated by contracts—short, long, confusing, one-sided; micro-font printed and by-the-pound custom door-stoppers. Folks who sign before fully understanding, or sometimes even reading, a legal document never cease to amaze and keep armies of trial lawyers in business. While I’ve seen this in practice, I’ve never had any quantitative data on the extent of the problem, that is until now.

The 2010 Denver Metropolitan Regional Science & Engineering Fair is February 24 and 25. Hundreds of students, grades 6-12, will set up their projects, an amazing array of intellectual curiosity, in the Denver Museum of Nature and Science. My 7th grade daughter’s middle school held their science fair last week in preparation for Metro. In a room packed with displays, it was a study of contract-signing behavior that grabbed my attention.

 

This 7th grade scientist/lawyer had stationed herself in the Cherry Creek Mall with a clipboard and a bowl of chocolates. She asked shoppers to help her compare the relative sweetness of the chocolates, but of course, first, they needed to sign a one-page, printed release. If they read the release, however, the subjects would learn that what she really wanted was for them to flip the page and draw a happy face on the back.

Only two of her twenty subjects drew a circle with eyes and smile, and one of those two first apologized for having to read the consent form, because she is a lawyer. The click-to-accept contracts of the internet age and releases as justifiable paranoid responses to a litigious society apparently wore the rest into legal apathy. Maybe you, too.

Standardized contracts offered on a take-it-or-leave-it basis are, in legal circles, often referred to as “adhesion contracts.” There are legal theories and court cases on why adhesion contracts are unconscionable and thus unenforceable--sometimes.

Is there a better example of a take-it-or-leave-it contract than the terms of use for social media networking sites like Facebook? A recent attack on Facebook’s terms of service as an unenforceable adhesion contract, however, was rejected by a federal court. Law Professor Eric Goldman writes about the case in his Technology & Marketing Law Blog:

It's harder to trump properly formed online user agreements than most people wish, and this case is a small example of that. Facebook users who are unhappy with Facebook's user agreement can find recourse in a variety of ways, but assuming the contract is going to fail in court is one of the least preferred methods.

If legal issues arise under an unread or merely skimmed contract, resolving the issues by voiding the contract requires judicial action. That means long waits, legal fees, stress and hours of your time. Even if you succeed in defeating the contract—and that is hardly a given—think of what it has cost you.

So read before signing. If a contract is important, hire a lawyer to work with you. Even a take-it-or-leave-it deal gives you the choice of leaving it; if you do take it, take it knowing what is expected of you. Most likely it is more than a happy face.

Speaking of happy faces, the next time you are enjoying the spray of your morning shower in your face, consider the following photo from my daughter’s Metro project. She and a partner tested shower heads for mold and bacteria growing inside the shower head. So read your contracts and occasionally run your shower head through your dishwasher.

Lawyers, Guns and Money: Two Not Funny Updates.

Recent stories in the Denver Post prompted me to update a couple of my January posts.

In Joint Tenancy: Medical Marijuana Leases, I encouraged owners of commercial real estate to be careful when leasing to medical marijuana tenants, at least until the law--federal, state and local--becomes more settled. Last week's high-profile raid by the U.S. Drug Enforcement Agency (DEA) of a medical marijuana grower in the Denver area only intensifies the need for landlord caution.

Colorado’s medical marijuana rush began after an October 2009 memo from the United States Department of Justice directed law enforcement personnel to refrain from enforcing federal law (marijuana is still an illegal substance under federal law) against people in “clear and unambiguous compliance with existing state laws concerning medical marijuana.”

Why business people would rely on a memo that has no force of law, a memo that can be withdrawn, changed or simply ignored without notice, is beyond me, especially in Colorado where the memo must be punctuated with large question marks.  What is Colorado law, beyond a vague voter-approved constitutional amendment, and what does clear and unambiguous compliance look like?  DEA Special Agent Jeffery Sweetin, as quoted in the Post, gave Colorado his answers.

"Technically, every dispensary in the state is in blatant violation of federal law," he said. "The time is coming when we go into a dispensary, we find out what their profit is, we seize the building and we arrest everybody. They're violating federal law; they're at risk of arrest and imprisonment."

Agent Sweetin’s view is not the final word on the matter, of course, but Friday’s raid underscores the legal uncertainty surrounding medical marijuana and the risks involved. So until the smoke clears, be very, very careful before you lease to a tenant in that business.

In Willy Wonka and the Law Degree Factory, I expressed my concern that neither law schools nor prospective or current law students are paying enough attention to the ongoing upheaval in the legal economy. I’ve since heard real fear from a number of law students about their prospects after school.

While I stand by my position that folks who are passionate and realistic about being lawyers should not turn their back on their dreams, a Denver Post article by attorney and journalist Mark Greenbaum put some hard numbers to the matter. Mark’s research at the Bureau of Labor Statistics on the supply and demand for new lawyers proved the disconnect was even worse than I expected.

Taking into account retirements, deaths and that the bureau's data is pre-recession, the number of new positions is likely to be less than 30,000 per year, far fewer than what's needed to accommodate the 45,000 juris doctors graduating from U.S. law schools each year. 

I strongly recommend Mark's article to everyone considering a legal education.

I Cannot Tell a Lie: There is No Presidents Day Holiday

George Washington’s Birthday, February 22, had been a popular, but unofficial, holiday long before it joined New Year’s Day, Independence Day, Thanksgiving Day, and Christmas Day as our country’s fifth legal holiday in 1879. A century later, the Monday Holiday Law shifted the observance to the third Monday of February, but no law changed the George Washington’s Birthday holiday to Presidents Day. Advertisers, interstate politics, and popular neglect did that.

Whatever happened to “first in war, first in peace and first in the heart of his countrymen?” The sentiment of Henry Lee’s eulogy of Washington didn’t survive the Monday Holiday Law. After all, if you aren’t celebrating Washington’s actual birthday, then it’s an easy step to lump in Abraham Lincoln, whose February 12th birthday was always close enough to Washington’s to confuse school kids anyway. From there it’s a slippery slope all the way to down to Millard Fillmore, James Buchanan, Andrew Johnson, Franklin Pierce, Warren Harding and your pick of a contemporary worst President.

Since there is no official Presidents Day federal holiday, it is impossible to tell if Presidents Day refers to Washington and Lincoln, or if it is meant to include all of our Presidents. While I greatly admire President Lincoln, we do ourselves a tremendous disservice when we forget why Washington deserved, and continues to deserve, his own holiday, even if he is no longer first (second, third or even fourth) in the hearts of his countrymen.

George Washington created our model, the world’s model, of a democratically-elected, republican chief executive. He had no precedent, no guide other than his character. Following his 1783 defeat of the British in the Revolutionary War, Washington could easily have become the king or dictator of America (all too often the result of revolutions, before and since Washington), but he did not.

Instead General Washington, following the principles he and his Continental Army had fought for, surrendered his sword, the sword in this photograph, to Congress, the elected representatives of the people.

Then, after becoming the first President under the Constitution adopted in 1789, Washington did it again. After serving two terms, Washington willingly relinquished his office when he could have been President for life. Our infant Constitution and the notion of republican representative democracy had taken root, and the model of the American Presidency was cast. No other President can make that claim and that is why today is, and should always be, not Presidents Day, but George Washington’s Birthday.

By George, I’ve done it: ten posts on our ten legal holidays. I started this mini-series quite inadvertently when my annoyance with popular indifference to the reasons for our legal holiday spurred posts on Memorial Day and Independence Day. When Labor Day came around, I realized I had to finish what I started; annoyance gave way to personal discovery. Huffington Post gave me a bigger platform for my words just before Columbus Day, and then came my holiday busy season: Veterans Day, Thanksgiving, Christmas, New Year’s, and Martin Luther King. It’s been an interesting journey, thanks for joining me on it.