Opinion ID: 67236
Heading Depth: 3
Heading Rank: 1

Heading: Fraud and Unilateral Error

Text: Under Louisiana law, “[i]t is well settled that a party who signs a written instrument is presumed to know its contents and cannot avoid its obligations by contending that he did not read it, that he did not understand it, or that the 4 Parol evidence is admissible where a party argues “vice of consent,” either through mistake or fraud. Condrey v. Suntrust Bank of Georgia, 429 F.3d 556, 563 (5th Cir. 2005); see also LA . CIV . CODE ANN . art. 1848. 5 other party failed to explain it to him.” Aguillard v. Auction Mngt Corp., 908 So.2d 1, 17 (La. 2005). Bearing this principle in mind, Louisiana courts have consistently held that a unilateral error cannot invalidate an agreement if it was caused by a complaining party’s “inexcusable ignorance, neglect, or want of care” or where that party “through education or experience, had the knowledge or expertise to easily rectify or discover the error complained of.” Scott v. Bank of Coushatta, 512 So.2d 356, 362, 363 (La. 1987). This has become known as the contractual negligence defense and is most commonly used to bar rescission for errors “resulting from a party’s failure to read the document in issue.” Ill. Cent. Gulf R. Co. v. R.R. Land, Inc., 988 F.2d 1397, 1405 (5th Cir. 1993). The defense also applies to fraud claims: “Fraud does not vitiate consent when the party against whom the fraud was directed could have ascertained the truth without difficulty, inconvenience, or special skill. This exception does not apply when a relation of confidence has reasonably induced a party to rely on the other’s assertions or representations.” L A. C IV. C ODE A NN. art. 1954. And again, this defense is consistently applied to bar a party’s fraud claim where the complaining party failed to read a document before signing it. E.g., Martin v. JKD Investments, LLC, 961 So.2d 575, 578 (La. App. 2d Cir. 2007); Sonnier v. Boudreaux, 673 So.2d 713, 717–18 (La. App. 1st Cir. 1996). The Rutherfords admit that neither they nor their attorney read the final lease agreement before signing it.5 Had they read the document, they could have easily discovered the allegedly erroneous property description. The property description is contained in the “Premises Leased” provision, which is the first provision in the lease and is prominently located on the first page of the 5 The Rutherfords also do not claim, nor is there any evidence to suggest, that a relationship of confidence existed between themselves and Pioneer. 6 agreement. It is set off by double indents, contains no more than twenty-five words, and begins with “[a]ll of the land owned by Lessor.” Further, the Rutherfords were experienced in leasing their property, had qualified counsel at their disposal, and were in possession of the lease for three weeks before signing it. The lease was signed by them, and signed as a witness by their counsel (and acknowledged by them before a notary who was their counsel’s secretary) all in their counsel’s office. It was then sent to Pioneer for execution by Pioneer. Clearly the Rutherfords could have easily discovered the alleged error simply by reading the document; thus, the contractual negligence defense bars the Rutherfords’ claims that their consent is void due to fraud or unilateral error. Contractual negligence, however, “does not bar reformation where mutual mistake has been pleaded and proved.” Ill. Cent., 988 F.2d at 1398. Thus, we now turn to whether a fact question regarding mutual mistake exists.