Signing Documents
People routinely sign documents
or forms without giving them much
attention. Too often, people do not
read these documents, thinking
the wording is “routine,” “standard-
ized,” or “too complicated.” Some
people mistakenly assume adjustments can be made at
a later date.
Keep in mind that you probably would not be asked
to sign a form or document unless someone thought
it was important. A contract describes agreements be-
tween parties, and signing one may impose both legal
and nancial obligations or requirements on you. This
pamphlet discusses common types of legal agree-
ments and explains basic practices to follow to avoid
misunderstandings or problems.
Certain precautions should be taken when signing
documents. Always read a document before you sign
it. It represents a highly legally binding agreement or
promise and, upon signing, you agree to what it says —
not what you think or hope it says. Once in force, it gen-
erally cannot be altered unless both parties agree. Fur-
thermore, with very few exceptions, such agreements
cannot be broken.
Examples of documents which people are frequent-
ly asked to sign include:
• Installment sale agreements
• Security agreements (when borrowing money or buy-
ing merchandise on a time payment plan)
• Earnest money receipts or real estate purchase and
sale agreements
• Leases or rental agreements
• Application forms (for credit, credit cards, loan, etc.).
• Repair authorizations or orders (for automobile or
home repairs)
• Purchase orders
The foregoing are examples. Some of them are
discussed in more detail in this pamphlet. However, no
matter what the form is called, read it carefully and ask
questions to be sure you understand and agree with the
terms before you sign. If an agreement involves com-
plicated technical language or an expensive item, you
may want to have your lawyer review the provisions be-
fore you sign. Finally, insist on receiving a copy of the
signed document.
Before You Sign
You signature, like your ngerprint, is unique. No one else
has one exactly like it, and only you can use it.
If uncertain about signing a document, seek informa-
tion and advice. It usually costs far less to prevent problems
than to remedy them. Your signature could legally bind you
to actions or payments. For your own protection, you should
clearly understand what you are signing, why you are sign-
ing, and what the consequences may be. Do not be rushed
or pressured into signing something before you fully under-
stand it. It is rarely possible to avoid legal obligations of an
agreement, once it is signed.
Accommodating Others
Even when you are not directly involved in a transaction,
you may at times be asked to sign an instrument or docu-
ment to accommodate someone else. Examples include
co-signing someone else’s promissory note or purchase
contract, endorsing a check, or signing a guaranty.
Afxing your signature to a document may cause
events of great consequence to you. If you sign a docu-
ment or instrument to accommodate some other person,
you will be personally liable for the obligation created by
that document. If the person you are accommodating
fails to pay or perform the obligations required by the doc-
ument, you will be legally required to do so. For example,
your signature on a note as a “co-signer” or your endorse-
ment of a check could result in your having to make it
good if the principal signer fails to pay.
Do not co-sign documents with someone else or sign
guaranties unless you have condence in the nancial abil-
ity of that other person and in his or her integrity. Further-
more, you should not sign a guaranty or co-sign a docu-
ment unless you are deliberately willing to risk being sued
if that other person does not pay or perform.
Oral Promises
As a general rule, a written contract is nal. Promises that
are made but not written into the contract are rarely con-
sidered by the courts. There are some situations when an
oral promise or representation will be legally binding and
enforceable, but you cannot depend on it; verbal promises
are usually risky and should be avoided. In most cases, a
written and signed document will supersede all oral discus-
sions and promises.
If, after entering a transaction, you feel you have been
misled by oral representations or promises, you may wish
to consult a lawyer. In some situations, oral claims or cer-
tain sales practices involving displays of samples or sales lit-
erature can be a basis for complaint and relief. This is particu-
larly true for consumer transactions, where many regulations
exist to protect against fraud or deceptive and unscrupulous
sales tactics. You can, however, often avoid problems by in-
sisting—before you sign the document—that oral promises or
representations be written into the agreement.
Making Payment Agreements
In some situations, it may be advantageous to buy merchan-
dise on an installment or “time payment” plan. Under this
arrangement, you will usually be asked to sign a document
called a “security agreement,” a “purchase agreement,” or an
“installment sales agreement.” Your rights and your liabilities
will be governed by the document, whatever it is called. “Buy
now and pay later” opportunities should not be accepted until
you fully understand what is involved.
Most consumer installment purchase transactions are
regulated by laws that require the document to set forth cer-
tain information. Furthermore, the seller must furnish you
with a signed copy of the agreement. Information that is gen-
erally required to be in the document includes:
• a description of the merchandise;
• the total cash price;
• the down payment;
• trade-in allowance (if any);
• the net cash price;
• the nance charge;
• the total amount to be paid in installments;
• the amount of each installment; and
• the method and period of time over which installments are
to be paid.
It may also be necessary for the seller to set forth in
the document a gure called the “annual percentage rate”
or “APR.” That gure tells you the percentage cost of cred-
it that you will incur each year as a result of signing that
agreement.
Even if the transaction is not legally subject to such dis-
closures, ask the questions you feel are necessary to give you
the essential information. You should also be sure the pro-
visions of the document are consistent with the information
you are given.
Signing Contracts
People considering the purchase of a home often sign a
“purchase and sale agreement” or “earnest money receipt.”
These documents are contracts that legally require the sell-
er to sell, and the buyer to purchase the property.
If the buyer refuses to purchase the property after
signing an “earnest money form” or “real estate purchase
and sale agreement,” the seller has the option of keeping
the earnest money deposit or of suing the buyer to force
purchase of the property.
The agreement also imposes obligations on the seller.
The seller cannot give the earnest money deposit back to
the buyer and refuse to sell. If there is a real-estate agent
involved in the transaction, the earnest money receipt or
agreement will also impose an obligation on the seller to
pay a real-estate commission or fee.
A purchase and sale of real property can be a complex
transaction. When making an investment as important as
a home, it is sensible to consult a lawyer and have him or
her review the documents before you sign anything.
Leases and Rental Agreements
When renting a home, apartment, commercial space, or
other property, you may be asked to sign a written contract,
usually called a “lease” or “rental agreement,” which should
cover all terms of the agreement with the property owner.
A lease establishes a tenant’s right to use property
for a specied term. City, county, and state regulations can
also affect the terms of a lease agreement.
Most leases say how much rent is to be paid, dates of
possession, notication requirements to terminate the lease,
responsibilities for damages, and other concerns. The docu-
ment might also cover restrictions on pets, subletting/trans-
ferring the lease, or occupancy and use of the premises.
Lease agreements might also mention other papers,
such as “house rules.” Do not sign the agreement until you
have read and been provided a copy of these rules. Make
certain all oral agreements are written into the contract
and be sure all blank spaces are lled in or crossed out
before you sign it.
Printed lease forms from an ofce-supply store or oth-
er source are sometimes adequate, but frequently they are
not. These forms may, for example, fail to answer specic
questions about your transaction, or they may not cover
certain agreements between you and the landlord. Do not
rely on promises intended for your situation that are not
included in the written contract.
Examine Documents Before Signing
Although retail credit contracts, real estate agreements,
and leases represent the more signicant nancial obliga-