15 Jan Broken Promises: NC Laws Can Protect Consumers and Small Businesses from Dishonesty and Coercion in Contract Negotiations
All too often, consumers and small businesses find themselves in the position of having to sign a contract for critical goods or services with little to no opportunity to negotiate the terms. Not surprisingly, those terms frequently turn out to be very one-sided, in favor of the party that drafted the agreement. But even when a party signs a contract that turns out to be extremely unfavorable, that party may still have legal rights and claims under North Carolina law that go beyond the terms of the agreement.
One example, recently addressed by the North Carolina Court of Appeals, is when a party with no real bargaining leverage signs a contract after being coerced or even outright lied to by the other party. As the Court of Appeals stated in that case (Hester v. Hubert Vester Ford, Inc. (N.C. App. Jan. 6, 2015)), North Carolina’s consumer protection laws “are designed to provide consumers with a remedy for injuries done to them by dishonest and unscrupulous business practices.” Given that, even when the terms of a disputed contract provide the consumer or small business with no meaningful protection, there may be claims outside the contract, including claims for fraud or for violation of the State’s unfair or deceptive trade practices statute.
The Hester case involved claims by a consumer against a car dealership after the dealership repossessed a vehicle that the consumer had purchased. The consumer had no argument under the terms of the very one-sided purchase contract with the dealer, as there was no dispute that she had not made the monthly payments set out in the contract. But the consumer claimed that she was induced to sign the contract without even reading it by the dealer’s misrepresentations. She said that she had originally signed a contract to purchase the vehicle on terms that she could afford, but was tricked into signing a new replacement contract by the dealer’s representation that the terms would be the same, other than a change to the source of the vehicle financing. In fact, the new agreement nearly doubled the monthly payments, which the consumer claimed she did not learn until after she had signed.
The dealer denied the consumer’s claims about pre-signing misrepresentations, but the Court of Appeals found that the consumer had legal claims for fraud and unfair or deceptive trade practices that should survive to trial and be decided by a jury. In short, the consumer could have her day in court, even though the terms of the contract she signed were very unfavorable to her.
At Parry & Tyndall, we represent consumers and small businesses in many types of contract disputes. We have significant experience evaluating potential claims and defenses under the terms of all types of contracts, as well as separate claims such as fraud and unfair or deceptive trade practices that may arise from the parties’ dealings before and after the contract was signed. If you or your business have questions about your rights and obligations in this type of situation, please give us a call to set up a free initial consultation.
Parry & Tyndall, PLLC
Attorneys at Law