It’s Not My Signature, I Can’t Be Bound To That Contract! Not So Fast…

Iowa Supreme Court - Bound to A Contract You Did not SignOn October 18, 2013, the Iowa Supreme Court published its opinion in Life Investors Insurance Company of America vs. Estate of John M. Carrado and Federal City Region, Inc., No. 13-0102 (October 18, 2013) and found that you may be bound to a written agreement / contract you did not sign, but where your signature somehow appearsan outcome that likely sounds crazy at first blush.  Moreover, and perhaps even more eye-opening, the court further concluded that you may be bound to the agreement / contract even if you do not know who signed your name to the agreement / contract or whether the signature was even authorized. Of course, more facts provide context to this conclusion, but here is how the Iowa Supreme Court framed the issue:

If a party [you] receives a copy of an executed contract with that party’s [yours] signature thereon, even where it is not known who applied the party’s [your] signature to the contract or whether the [your] signature was authorized, and that party [you] (a) does not challenge the signature or otherwise object to the contract, and (b) accepts benefits and obligations under the contract for at least six years, then has the party [you] ratified the contract and is the party [you], therefore, bound by the terms of the contract?

Life Investors Insurance Company of America, p. 2.  In the words of the Iowa Supreme Court, we “answer the [] question in the affirmative.”  Id.  In short, yes, you can be bound.

While the opinion contains further legal analysis to supports its conclusion, which may be read in full here, one can imagine how the holding may result in several interesting outcomes in today’s digital age.  For instance, in today’s fast-paced, digital world, where signatures can be copied and pasted and digitally “applied” on-the-go by virtually anyone – with or without your knowledge and/or approval – the likelihood that the scenario above would arise is much greater.  Consequently, if you want to avoid being bound to an agreement that you or your company didn’t reach, then make sure you trust your business partners and keep a keen eye out for your name on documents, because, whether you like it or not, under certain circumstances in Iowa and many other jurisdictions, you may be bound!

One final, yet interesting legal note from the opinion is the Court’s finding relative to being bound to an agreement even where your signature is a forgery:  “In Iowa, our legislature has taken the position a principal [i.e. you or your company] may ratify [and be bound] by an unauthorized signature, including a forgery.”  Id. at 11.  Whether you like the outcome of this case or not, the Iowa Supreme Court explained its ruling in the following manner:  “A person should not be able to accept the benefits of a contract even if the signer’s acts are unauthorized, but deny his or her obligations under the contract because the signer’s acts are unauthorized.”  Id. at 11.

Should you have questions about being bound to an agreement you did not make, you should consider contacting an attorney to explore your rights and obligations.

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About Matthew McKinney

Attorney focused on civil and commercial litigation.
This entry was posted in Business Owner, Director, Litigation, Manager, Officer, Partners, Partnership and tagged , , , , . Bookmark the permalink.

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