“But I didn’t know what I was signing….”

In real estate cases—which frequently involve long purchase agreements, loan documents, personal guarantees, deeds of trust, etc.—we’ve likely all had a client or opposing party who trots out the line that they didn’t know what they were signing, or they didn’t read or understand what they were signing, so the document shouldn’t be enforced according to its terms.

Most of us instinctively believe the claim is a loser: You signed the document, you’re bound by it.

But is this actually right? 

Well, we did some digging. Here is the Arizona law on the subject:

Nationwide Resources Corp. v. Massabni, 134 Ariz. 557, 658 P.2d 210 (App. 1982):

“A mistake of only one of the parties to a contract in the expression of his agreement or as to the subject matter does not affect its binding force and ordinarily affords no ground for its avoidance, or for relief, even in equity.”

“A manifestation of acceptance to the offeror or his agent forms a contract regardless of the intent of the acceptor.”

Pacific Western Construction Co. v. Industrial Comm’n of Ariz., 166 Ariz 16, 800 P.2d 3 (App. 1990):

“Failure to read an agreement reduced to writing and signed by a party precludes recovery for fraud or misrepresentation concerning oral statements made about the contents of the agreement.”

In re Henry’s Estate, 6 Ariz. App. 183, 430 P.2d 937 (1967):

“In this jurisdiction a person who is competent is held as a matter of law to know the contents of an agreement he signs.”

Bradley v. Industrial Comm’n, 51 Ariz. 291, 76 P.2d 745 (1938):

“It is universally held that, when the parties to a contract have reduced it to writing, one of them may not defeat it by showing by parol evidence that he did not understand what the contract meant, except on the ground of mutual mistake, fraud, or misrepresentation, and the modern doctrine is that the rule, strictly speaking, is one of substantive law rather than of evidence.”

“When a person bound by a writing has carelessly signed the same without reading it, the mere fact that he believed it to be something else than what it was, when such belief was not brought about by the misconduct of the other party, furnishes no ground for the admission of parol evidence that he did not mean to execute it, for courts are not under the duty of relieving parties of the consequences of their own gross negligence.”

Mut. Ben. Health & Acc. Ass’n v. Ferrell, 42 Ariz. 477, 27 P.2d 519 (1933), overruled in part on other grounds by Occidental Life Ins. Co. v. Bocock, 77 Ariz. 51, 266 P.2d 1082 (1954):

“[I]t is generally held that, when a party has an equal opportunity to read and examine a contract with the other party, it is his duty to do so, and, if he fails, he will not be permitted to avoid it on the ground that he did not read it or supposed it was different in its terms from what it really was. As the Supreme Court of the United States said in the case of Upton v. Tribilcock, 91 U. S. 45, 50, 23 L. Ed. 203: ‘* * * It will not do for a man to enter into a contract and, when called upon to respond to its obligations, to say that he did not read it when he signed it, or did not know what it contained. If this were permitted, contracts would not be worth the paper on which they are written. But such is not the law. A contractor must stand by the words of his contract; and, if he will not read what he signs, he alone is responsible for his omission. * * *’”

And, in Teran v. Citicorp Person-to-Person Financial Center, 146 Ariz. 370, 706 P.2d 382 (App. 1985), the Arizona Court of Appeals held that loan documents written in English were enforceable against persons who claimed they didn’t speak, read, or understand English and who claimed they didn’t understand what they had signed:

“In order to discuss questions one through seven, we must review the Arizona law and review additional facts concerning the meeting at Citicorp when the loan documents were signed. The general rule holds that one who signs a written document is bound to know and assent to its provisions in the absence of fraud, misrepresentation, or other wrongful acts by the other party. Nothing before the trial court even permitted any inference that Citicorp committed any fraud, misrepresentation, or wrongful act. The appellants received exactly that which the documents set forth. Thus, assuming arguendo that the appellants did not understand the documents or their legal significance, these fact questions are not material unless Citicorp undertook the responsibility to explain the documents to the Terans and, either intentionally or negligently, failed to adequately perform that undertaking.”

So there you have it. Your instincts were correct. As a general rule in Arizona, someone who signs a written document is bound by its terms unless there was fraud, misrepresentation, or other wrongful acts by the other party. There might also be a “reasonable expectations” exception if Darner (140 Ariz. 383, 682 P.2d 388 (1984)) is expanded from the insurance arena to the context of real estate agreements.

And now you have some authority on the issue, for the next time you hear someone say they didn’t know what they were signing.