ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, August 12, 2013

Oh Snap! Consumer Sues Bank for Not Abiding by Terms of Agreement

Miriam Cherry shared with the Contracts Prof world this story from the UK's The Telegraph about a man who got sweet, sweet, SWEET revenge on a credit card company.  According to The Telegraph, Dimitry Argakov received a credit card offer from Tinkoff Credit Systems (Tinkoff).  He scanned the offer, changed some of the terms to elimnate all fees, interest and credit limits.  According to the new terms. Tinkoff would be fined 3 million rubles each time it violated the terms and 6 millio rubles for any attempt to terminate the agreement.  

Tinkoff seems to have approved the credit card without reading the altered agreement, and a court has held that the company is bound by the terms of the altered agreement.  The issue came before a court when Tinkoff sued Mr. Argakov for 45,000 rubles worth of fees and fines not altered in the agreement.  A Russian judge found Mr. Argakov liable for 19,000 rubles but upheld the altered agreement.  But now Mr. Argakov is bringing his own suit seeking 24 million rubles in damages because Tinkoff has not hornored the terms of the agreement.  Tinkoff is planning to counterclaim for fraud.  

Pace University School of Law's James Fishman suggests that Mr Argakov ought to be careful about overplaying his hand.  He cites Hand v. Dayton-Hudson, 775 F.wd 757 (6th Cir. 1985).  In that case, Mr. Hand, an attorney due to be terminated by his employer, was asked to sign a release in which he promised not to sue his employer in return for a payment of $38,000.  Hand objected on the ground that he was entitled to that sum in any case.  When Dayton-Hudson nonetheless proferred the release, Hand altered it to except from the release claims relating to age discriminatino and breach of contract.  Hand did so extremely cleverly, making the altered release look identical to the original.  

When Hand sued base on the claims excepted from the release, Dayton-Hudson alleged fraud.  The District Court agreed with Dayton-Hudson, reformed the release to return it to its original form and dismissed Hand's complaint.  The Sixth Circuit affirmed, reasoning as follows:

The defendant was excused from not having read the new document because the general rule of being held responsible for contracts one signs, even if one has not read them, "is not applicable when the neglect to read is not due to carelessness alone, but was induced by some stratagem, trick, or artifice on the part of the one seeking to enforce the contract." Komraus Plumbing & Heating, Inc. v. Cadillac Sands Motel, Inc., 387 Mich. 285, 290, 195 N.W.2d 865 (1972) (citing International Transportation Ass'n v. Bylenga, 254 Mich. 236, 239, 236 N.W. 771 (1931)). Hand carefully retyped the release in such a way that Dayton-Hudson's agent Harms would never expect that changes were made. The failure to read most definitely resulted from Hands' clever scheme, and, accordingly, does not bar Dayton-Hudson from challenging the validity of the fraudulent release. 

The reformation remedy was available under Michigan law because Dayton-Hudson's mistake was caused by Hand's conduct.

Mr. Argakov had better hope that Tinkoff does not seek a change of venue to Michigan.


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