Can a party argue they did not know a contract was changed before signing it?

Question

This is a follow up to the question Can I cross out parts of a contract before signing it?

If a contract is given to someone and they modify it before signing, and the other party doesn't notice the modification until much latter (after both parties had full-filled/been full-filling their contractual obligations) would the part that had been modified be enforceable?

For example, if a manager emailed an prospective employee a contract containing the pay rate of $20/hr, if the prospective employee crossed out $20/hr and replaced it with $25/hr, then went to work and gave the manager the contract which he failed to carefully read, continued working for a few months, would the employee be entitled to $20/hr?

Since some contracts don't required a signature, what would count as the manager accepting the offer? I guess if it could some how be proven that the manager new the employee expected $25/hr and allowed him to continue work?

Answer 1

if a manager emailed an prospective employee a contract containing the pay rate of $20/hr, if the prospective employee crossed out $20/hr and replaced it with $25/hr, then went to work and gave the manager the contract which he failed to carefully read, continued working for a few months, would the employee be entitled to $20/hr?

A party ought to timely alert or notify the other counterparty about any disagreements or proposed changes. This is especially recommendable when evidence suggests that the counterparty's expectation that the party only would sign the contract was reasonable.

In the example you outline, the employee's unilateral alteration of the compensation/rate in the contract seems unlikely to favor the employee's position. That is because typically employer and employee negotiate compensation prior to formalizing their agreement. In that case, the employee would need stronger evidence with which to overcome the employer's credible argument that he did not knowingly accept the altered rate.

Answer 2

Modifying a contract makes it a counter-offer. An offer or counter offer is only available for acceptance, creating a contract, if it is communicated to the other party.

Whether it was communicated or not will depend on the facts of the particular case.

Factors that will matter include:

• If industry usage or past dealings between the parties are that such changes are common, or rare.
• How prominent the changes are e.g. large writing in red ink is more likely to have been communicated than small writing in pencil.
• If the amendments are initialled by both parties.
• If there is a covering note or email drawing attention to the changes.
• Whether the parties are ‘businesspeople’ - the law expects people who contract commercially to look out for their own interests.

Answer 3

It is possible to argue this and I have one one case in my career in this fact pattern (involving an unauthorized change to a key provision in a final draft of a big dollar, complex business transaction with a contract document that was almost a hundred pages long and had been reviewed by counsel, and when, a few minutes after the previous draft was reviewed it was changed in this respect despite the fact that everyone at the conference table had been told that only a typo and some formatting errors were changed).

But, it is very difficult to prevail on a claim like this because as a general rule, signing something constitutes a representation that you have done everything you need to in order to make yourself comfortable that you know what it says.

Most versions of this kind of activity are called "fraud in the factum", the classic example of which would be giving someone a piece of paper with only the signature line showing and saying that it is a receipt when really it is a promissory note or a deed transferring real estate.