Every New York business deals with contracts: sales contracts; purchase agreements; leases, for equipment or for real property such as a store, warehouse, or office; even insurance policies which protect the business, its employees, and its property from loss and damage. Contracts are the means by which a business conducts business. When people, including business owners, think of a contract, they commonly picture a written document, which specifies all of the terms and conditions of the agreement between the parties. A contract, in order to be valid, does not necessarily need to have all of its terms reduced to writing. When there is a written contract, however, it is important that a business owner take the time to read and understand it because, chances are, the business will be bound by the contract in its entirety.
Most businesses believe that they know the terms of a contract before they enter into it, but they often concentrate on what they think are the most important provisions, without being concerned about the rest. Before the typical business enters into a contract, it will know how much money it will spend or how much money it will earn. It will be certain of exactly what it has agreed to sell, to buy, or to lease, and of how long it has to pay or to be paid. Many times, however, a business does not understand, and has not even read, the fine print. That, unfortunately, is a mistake.
In New York, a party that signs or accepts a written contract is conclusively presumed to know its contents and to assent to them, unless the other contracting party is guilty of fraud or some other wrongful act. See Metzger v. Aetna Ins. Co., 227 N.Y. 411, 416 (1920); Superior Officers Council Health & Welfare Fund v. Empire HealthChoice Ass., Inc., 85 A.D.3d 680, 682 (1st Dept. 2011); and Imero Fiorentino Associates, Inc. v. Green, 85 A.D.2d 419, 420 (1st Dept. 1982). This rule often can have unintended, and harsh, consequences for the unwary.