ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Tuesday, July 16, 2019

Lawyers: Beware your obligations when you sign a contract

A recent case out of California, Monster Energy Co. v. Schechter, S251392, concerns a settlement agreement imposing confidentiality obligations. The parties signed the settlement agreement. Their lawyers also signed the settlement agreement, under the preprinted notation "APPROVED AS TO FORM AND CONTENT." One of the lawyers then made public statements about the settlement and was sued for breach of contract. The lawyer argued that they were not personally bound by the confidentiality obligations and their signature meant only that they had approved that their client be bound. 

The trial court disagreed with the lawyer's argument. The court of appeals reversed, finding that the attorneys were not personally bound based on the presence of the notation. This California Supreme Court ruling reversed again, concluding that the notation did not preclude a finding that the attorneys were personally bound. The agreement itself included counsel in its confidentiality provisions, and a signature on a contract usually indicates consent to be bound by that contract. 

While it is true that the included notation is generally understood to mean that the attorney has read the document and recommends that their client should sign it, that does not mean that it also inevitably means that the attorney is not bound by the agreement. In this case, where the agreement expressly referenced the confidentiality obligations of counsel, a conclusion that counsel intended to be bound by their signature, even with the notation, was plausible. 

(h/t to Eric Chiappinelli of Texas Tech for passing this case along!)

https://lawprofessors.typepad.com/contractsprof_blog/2019/07/lawyers-beware-your-obligations-when-you-sign-a-contract.html

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Comments

In some ways, this was the easy case - the court had the signed "approved" language. But suppose the lawyer never did sign the contract, couldn't he or she still have been bound - after all, the language did purport to bind the lawyer, and the lawyer did participate in the drafting. And since when do confidentiality agreements have to be in writing?

Posted by: Andrew | Jul 18, 2019 9:23:22 AM

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