Protect Yourself from Unfair Contracts

• December 15, 2023
• Contract Disputes

Our Maryland Business Lawyers Can Help Protect You Against Unfair Contracts

As a business owner, you will enter into a number of contracts — leases, supplier agreements, employment contracts, and more. A contract legally entered into is supposed to protect all parties from unfair practices, serve as a guideline as to what is expected in terms and conditions and performance, and specify what the parties are to gain from the transaction. You want to ensure that any contract you sign is fair and offers you some legal recourse should a contract dispute arise, but it is equally important to ensure you do not inadvertently create unfair or illegal contracts. An experienced contracts attorney will help you learn how to protect yourself from unfair contracts in Maryland.

Unfortunately, problems often arise with contracts, and when a contract dispute arises, it may turn into a lawsuit for breach of contract and become a matter for the court to resolve. The result can be expensive litigation and loss of business and your valuable time. To lessen the chances of contract disputes and lawsuits, business owners must make sure all contracts entered into are created fairly and according to Maryland and federal law.

Business law attorneys Rebekah Lusk and Steven Bright and their team know the challenges that face business owners and are here to help with all your contract needs. We are dedicated to supporting our clients by providing them with the legal services necessary to create fair contracts and to provide defense should problems come up.

Regardless of your business situation, we are here to help you create new contracts from the start, examine your existing contracts and rewrite them if necessary, and handle any challenges that arise.

Do not let the small contract issues become major problems in the future. Contact the Frederick, Maryland, business law attorneys at Lusk Law, LLC, to gain a long-term ally for your business. Call (443) 535-9715 today.

Maryland Contract Basics – Business Contract Lawyers Explain the Laws

Maryland has a Consumer Protection Act that covers unfair contracts. Under Title 13, Subtitle 3 §§ 13-301, unfair or deceptive trade practices are defined.

According to the law, unfair or deceptive trade practices relating to contracts include any:

• False, falsely disparaging, or misleading oral or written statements or other representations which can deceive or mislead consumers.
• Representation that consumer goods, realty, or services have a use, benefit, or quantity which they do not have or that consumer goods, consumer realty, or consumer services are of a particular standard, quality, grade, style, or model which they are not.
• Failure to state a material fact if the failure deceives or tends to deceive.
• Knowingly making a false statement that a service, replacement, or repair is needed.
• Deception, fraud, false pretense, false premise, misrepresentation, or knowing concealment.
• Suppression or omission of any material fact that a consumer relies on in connection with a contract.
• Use of a contract related to a consumer transaction that contains a clause that waives the consumer’s right to a legal defense.
• Use by a consumer realty seller of a contract related to the sale that contains a clause limiting the buyer’s right to obtain consequential damages as a result of the seller’s breach or cancellation of the contract.

These and other unfair competition laws are intended to ensure that consumers who enter into a business deal benefit from the bargain they were promised. The laws apply to all industries in Maryland, and there are also federal laws under the Federal Trade Commission Act or FTC Act under which a company can face legal action regarding unfair competition affecting a consumer.

What Happens When a Dispute Over an Unfair Contract Arises?

What Is Considered an Unfair Contract?

The terms of a contract legally bind all parties; however, if one party later determines that the contract is unfair, a dispute could arise. Sometimes, solving contract disputes is simple: One party breached the contract’s terms and therefore violated it. Other times, the issues may need to be clarified. If one party signs a contract with unfair terms, they may be bound by those terms until or unless the other party breaches the contract.

Unfair contract terms can limit the rights of one party and place them at a disadvantage. Unfair clauses in a contract may occur at any point, from the initial sale to the processing of payments. So how can you get out of an unfair contract? An experienced Frederick, MD, contracts lawyer can help you dispute the contract terms or renegotiate more favorable terms on your behalf.

Contract clauses are considered unfair if they result in a significant imbalance between the rights of the signing parties, create a detriment to potential consumers, or lead to a situation contrary to “good faith” business practices. Specific contract terms considered unfair in the U.S. are addressed at the state level or on a case-by-case basis; there is no omnibus law covering specific unfair terms for the entire country. However, a contract may be considered unfair if the verbiage is unfair.

Unfair contract terms can apply to any aspect of the contract:

• Advanced deposits or payments — requiring payment too far in advance or a nonrefundable deposit in some cases could be considered unfair.
• Cancellations — requiring the consumer to provide notice of cancellation too far in advance could be considered unfair.
• Excessive fees, charges, or sanctions.
• Assigning responsibility unfairly if something goes wrong.
• Amending the contract terms — the ease of renegotiating a contract may be considered unfair if changing the terms is prohibitively difficult.
• Resubscribing or automatic rollover — not providing fair terms for customers who wish to end the contract.

A contract may contain fair elements but become unfair depending on how the business applies the terms. For example, a cancellation penalty could be a fair part of a contract, but making the penalty substantially higher than the industry average or creating terms for canceling a contract that could be very hard for most people to meet may make the contract unfair.

Our Attorneys Know When Contracts Can Be Found Unenforceable

When contracts are not written correctly, the courts may find them unenforceable.

• Misrepresentation — if one party has deliberately made a false statement or withheld information essential to the contract.
• Unconscionability — if a contract is clearly unfair and the contract’s consideration benefits one party significantly more than the other.
• Lack of competency — If a contract is signed by a minor or a person with dementia, or someone who cannot read or who does not speak English but signs a contract written in English, the contract may not be enforced.
• Violation of a state or federal statute — if there is a state or federal law that takes precedence over a contract.
• Non-specificity — if the contract is based on a template that may lack specifics or does not comply with local laws.

If you have questions about what is considered an unfair contract, bring the document to our law firm for an evaluation. We will explain the terms and offer strategies for getting out of the contract or rewriting it with fairer terms.

How Can You Get Out of an Unfair Contract?

Depending on how your contract is structured, you might have a few options for getting out of it. If the contract is valid — that is, if it doesn’t contain an inherent flaw that would make it unenforceable — you and your business lawyer could have several approaches to consider.

We might send a demand letter to the other party, asking for you to be released from the terms or for cancellation of the contract for a smaller fee than stated in the contract.

You might be protected by the Federal Trade Commission’s cooling-off period, which grants customers a cancellation period after certain purchases valued at $25 or more. This rule allows you to cancel a contracted purchase within 72 hours; the salesperson must provide you with cancellation documents and forms before you sign the contract.

If you were not provided these documents or informed of your rights, you might be able to appeal the contracted sale as invalid.

We generally advise against deliberately breaching the unfair terms of the contract without legal advice. You may end up being served with a lawsuit for breach of contract, pulling you into a legal battle far more expensive than the unfair terms of the contract.

Finally, if you are in a high-stakes contract with unfair terms, we can try to renegotiate the terms, so they are more favorable to you.

The best way to avoid entering into an unfair or illegal contract is to consult a business law attorney. Get legal help drafting the contracts you use in your work, and only sign a contract once your attorney reviews it. Lusk Law, LLC, knows how to help business owners interpret and create contracts, putting them in the best position to avoid litigation. We can help you learn how to protect yourself from unfair contracts in Maryland. If you have questions about contracts, please call us at (443) 535-9715 today.

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Lusk Law, LLC brings personal experiences as small business owners, real estate investors, and landlords to the task of practicing law and working with clients. The practice includes civil litigation, business, construction disputes, employment, landlord/tenant, real estate, equine, and animal law.