In brief, “yes.” A person who signs a contract is bound by the contract even if the person does not read the contract before signing. As discussed below, this applies to any contract including Terms of Service and Licensing contracts that we all sign by clicking the “Yes, I agree” button when we use a website or software. Signing a contract you have not read is a bad idea from a legal and practical standpoint. If the contract is too complex or long, you should retain an experienced San Diego corporate attorney for advice and counsel.

Why am I Bound to a Contract That I Signed but Did Not Read?

Binding and enforceable contracts are among the cornerstones of a functioning commercial system like the one that operates here in the Golden State. Part of facilitating binding and enforceable contracts is avoiding excuses like “I did not read it before I signed it.” Another aspect of facilitating binding and enforceable contracts is presuming and assuming that people act in their own self-interest and that people are smart enough to read a contract (or seek help in understanding a contract). Why sign a contract — why act as though you intend to be bound — if you have not taken the most rudimentary step of reading the contract? Another consideration here is that California courts generally do not absolve parties from mistakes and errors caused by their own failure to exercise due caution. Reading a contract before signing it is one of those fundamental exercises of due caution.

As noted above, these rules apply to the contracts that we as consumers sign when we use websites and software. This was the result reached, for example, in the case of Mohamed v. Uber Technologies, Inc., 109 F.Supp.3d 1185 (U.S. Dist. N.D. California 2015). That case involved Uber’s website-based application and its various terms of service agreements. Abdul Mohamed was an Uber driver and sued based on various allegations related to payment of wages, reimbursements, and the like. The contracts that he signed — by clicking on various “I agree” buttons — required mandatory arbitration of his claims. Mohamed attempted to avoid the contractual requirements by claiming that he did not read Uber’s terms of service and the other agreements. Mohamed claimed he just clicked on the “I agree” buttons without reading the contracts that were hyper-linked.

However, the court rejected Mohamed’s argument that he was not bound just because he did not read the agreements. First, the court held that clicking on a “Yes, I agree” button that appeared near hyperlinks to the relevant contracts was a form of “signing.” In other words, no official “ink pen signature” is necessary in our electronic world. Clicking on “Yes, I agree” is sufficient particularly when Mohamed went on to use the Uber platform and to become an Uber driver. Furthermore, the specific facts showed that the “Yes, I agree” buttons were conspicuous and clear so that no argument could be made that Mohamed was unaware that he was entering a contract.

Finally, the court rejected the argument that Mohamed was not bound by the Uber contractual provisions because he did not read them. Mohamed also argued that “no one” would read the contractual provisions, particularly since most would be attempting to read the contracts on the small screens of the potential drivers’ smartphones. The court said that

“… for the purposes of contract formation it is essentially irrelevant whether a party actually reads the contract or not, so long as the individual had a legitimate opportunity to review it. Here, Plaintiffs had the opportunity to read the agreements on their phones, even if doing so would be somewhat onerous.”

For these reasons, the court held that a binding and enforceable contract had been formed. A similar result was reached in Castillo v. CleanNet USA, Inc., Case No. 17-cv-07277-JCS (U.S. Dist. N.D. California, December 18, 2018).

Call San Diego Corporate Law Today

For more information, call corporate attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard’s law practice is focused on business, transactional, and corporate matters and he proudly provides legal services to business owners in San Diego and the surrounding communities. Call Mr. Leonard at (858) 483-9200 or contact him via email. Like us on Facebook.

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