Failure to read contract no protection against liability

August 6, 2015

A coal mine superintendent failed to convince the Indiana Court of Appeals that he should not be held liable because he did not understand the contract he signed.

M & M Pump & Supply Inc., filed a lawsuit against Lily Group and its superintendent David Smith after the latter company defaulted on payment. Green Circuit Court granted summary judgment in favor of M & M and held Smith liable for $63,913.26.

Before the Court of Appeals, Smith asserted the trial court erred when it rejected his argument that he did not know he was signing a guarantee. Smith signed the credit agreement with M & M in August 2011. The contract included a provision that stated the individual who signed personally guarantees to pay M & M if Lily Group fails to pay.

The appellate panel found Smith’s mistake would not preclude summary judgment. Citing Clanton v. United Skates of America, 686 N.E.2d 896, 899-900 (Ind. Ct. App. 1997), the Court of Appeals noted a person is presumed to understand the documents he signs and cannot be released from the terms because he failed to read it.

The case is David Smith v. M & M Pump & Supply, Inc., 28A012-1502-CC-57.



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