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This question is very similar to this one. It's about a hypothetical scenario in which:

  • Party A (an individual or a company) writes a contract and sends it to party B
  • Party B makes small changes to the contract, and signs it
  • Party A signs the contract, but is unaware of the changes

The only answer to the question linked above states something along the lines of "it's a grey zone, theoretically it's legal, but don't try it" which of course is the reasonable answer to this type of scenario. But the following questions remain unanswered:

  • Does B have a legal obligation to inform A that changes were made to the document?
  • Is there any legal basis for A to argue that the procedure was dishonest, because they were expecting to sign "X" but they ended up signing "Y"?

Intuitively I would imagine that "I didn't read the document" is not a justification for A to contest the terms of the contract.

However, imagine the case of, say, loan contracts: considering 1) the length and complexity of the documents 2) the number of hours it would take for bank employees to read the thousands of contracts signed every year and 3) the significant financial incentive to be dishonest by changing e.g. the interest rate in the document, I would be surprised that nobody tried to kind of trick.

This question is not specific to the example of bank contract, or to a country in particular - though I'm mostly interested in Europe/North America. I'm just curious to understand what legally prevents this type of things from happening in general.

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Does B have a legal obligation to inform A that changes were made to the document?

This is definitely not a simple yes-no question. One ought to consider not only the tenets of contract law, but also notions of equity and of public policy.

On the one hand, courts acknowledge modified contracts that result from a battle of the forms. On the other hand, sliding changes in the contract without adequately directing the counterparty's attention to them tends to contravene the contract law covenant of good faith and fair dealing.

In the scenario you outline, imagine the inefficiency and risk of mistake if the parties engage in several rounds of offers and counter-offers by sliding changes scattered all over the latest draft of a contract (this is totally feasible, especially as laws nowhere limit the number of times a party can make a counter-offer).

Unless each party is conspicuous about his latest changes to the contract, the dynamics can easily become a matter of which party inadvertently binds himself to unacceptably detrimental clauses (some of which might re-occur after being stricken in a previous draft). This hinders the contract law prerequisite that a contract be entered knowingly and willfully.

Although the parties are responsible for reading the contract, subjecting the offeror/offeree to devote valuable resources each time a newly altered contract goes from one direction to the other seems contrary to public policy. Furthermore, that defeats the purpose of negotiations and of the prior efforts each party spent toward the contract (such as valuations and risk analysis).

I'm just curious to understand what legally prevents this type of things from happening in general.

An offer may include language to the effect of accepting the contract 'as is'. See the provision in the Uniform Commercial Code (for instance, see MCL 440.2207(2)(a)) whereby alterations are precluded "[if] the offer expressly limits acceptance to the terms of the offer".

The aforementioned statute also precludes terms which significantly alter the contract. See MCL 440.2207(2)(b). In a context of loan contracts --apropos of your example--, a borrower's unilateral alteration of the interest rate, of payment schedules, etc. constitute material alterations. Indeed, financial institutions are utmost sensitive to changes in interest rates and the timing of cash flows.

Even in the case of an offeree's immaterial alterations of a contract, an offeror might prevail under principles of equity. This is more evident in the case of entities which enter and manage a multitude of contracts simultaneously, be it via contracts of adhesion or upon negotiations with each counterparty. In line with my point on public policy, the additional cost of filtering a counterparty's last minute occurrences would make it impossible for economies of scale to develop.

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Normally, a counter-offer is indicated as such, and implies that there is some change to the terms of the contract. While it is usual to indicate the specific changes, once the other party (A in the question) is on notice that changes have been made, it is that party's responsibility to examine the contract, and not accept the counter-offer if the changes are not acceptable to it.

If B made changes to the signed copy sent by A, and returned it with those changes but with the signature intact, that would seem to be implying that B was accepting A's offer. B might be estopped to insit on its changed terms in such a case.

If B simply returns a somewhat modified version of the contract, the question would be if they did or said anything to imply acceptance of the original offer, or instead to imply a counter offer, I would think. This would be fact-sensitive, and the outcome might depend on the exact jurisdiction that ruled on the matter as well as on the detailed facts.

If there was a deliberate attempt to deceive A into thinking that no changes had been made an the original offer accepted, that might well constitute fraud or attempted fraud.

The definition of fraud used in the Wikipedia article on the subject is "fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right" Intentional misrepresentation or concealment of a materiel fact can in some cases constitute fraud, but the exact legal definition and the required proof will depend on the jurisdiction.

  • Thanks for the answer! Regarding the end of your answer: of course, actively lying about not making any changes would be a different story, but is omission -with intent- for the purpose of taking money sufficient to define fraud? Maybe it depends on your jurisdiction? – Mowgli Jul 16 at 0:30
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    @mowgli The definition of fraud used in the Wikipedia article on the subject is "fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right" Intentional misrepresentation or concealment of a materiel fact can in some cases constitute fraud, but the exact legal definition and the required proof will depend on the jurisdiction. – David Siegel Jul 16 at 0:34
  • Sure, but that's what I have a hard time wrapping my head around: regardless of the jurisdiction, how can there be "deception", "misrepresentation" or "concealment" if B gives a printed piece of paper to A, on which all the terms of the contract are explicitely written, unambiguously? I can see how there would be deception if A signed first, gave the original copy to B, who then made alterations and signed. But here isn't it A's responsibility to read the final version and check what they're agreeing to? – Mowgli Jul 16 at 0:44
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    @Mowgli that will depend on circumstances. If B hands A a paper and says "here is my signed acceptance of your offer" when in fact terms have been changed, that would be clear deception, although there might be a question as to whether A could reasonably rely on B's statement. If B says nothing at all, but the circumstances clearly imply an acceptance of a previous offer, not a counter offer, a count might find deception and thus estoppel under the "clean hands" doctrine, or perhaps fraud. – David Siegel Jul 16 at 0:55
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You agree with what you sign

It is a fundamental basis of contract law in common law jurisdictions that if you sign it then legally: you read it, you understood it and you agree with it.

Does B have a legal obligation to inform A that changes were made to the document?

No

Is there any legal basis for A to argue that the procedure was dishonest, because they were expecting to sign "X" but they ended up signing "Y"?

Contract Law

There are two but they are both long shots:

  1. Coercion an act done under duress is not binding.
  2. Non est factum but you must belong to "class of persons, who through no fault of their own, are unable to have any understanding of the purpose of the particular document because of blindness, illiteracy or some other disability" and the "signatory must have made a fundamental mistake as to the nature of the contents of the document being signed," including its practical effects and the document must have been radically different from one intended to be signed. Basically it protects the illiterate and profoundly mentally disabled. It doesn’t protect you merely because the document is in English and you only read French - get a translator.

Consumer Protection Law

Most consumer protection laws prevent misleading and deceptive conduct against consumers (which can include businesses in some jurisdictions). The situation you describe isn’t, however, you can imagine more complex scenarios that would.

The law doesn’t care that compliance requires businesses to invest resources in doing so. If a business chooses to sign a contract without reading it because investing the required resources is too expensive then that is a commercial decision they are entitled to make but they have to live with the consequences. For example, banks don’t check signatures on cheques because the cost of checking is more than the cost of fraud.

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