(a.k.a. should I have my attorney look at this?)
In the recent case of MLG Enterprises, LLC v. Richard L. Johnson (2016 WL 4582174, Tenn.2016) the Tennessee Supreme Court gave further credence to the age-old adage you receive to read and understand any documents before you sign it.
In the MLG case, the Court was asked to determine whether the individual who signed a commercial lease on behalf of a corporate tenant also agreed to be personally liable for the tenant’s obligation.
In reversing the Court of Appeals judgment, the Tennessee Supreme Court held that clear language that the individual would be personally responsible for the tenant’s obligations was effective to bind the individual.
In the case, MLG Enterprises, LLC (Landlord) entered into a written agreement for the lease of commercial real estate to Mobile Master Manufacturing, L.L.C. In the lease, there was clear language that Mr. Johnson agrees that he shall be personally liable for all of tenant’s obligations under the lease.
On the lease there were three (3) signature lines, one for the Landlord, MLG Enterprises, LLC; one for Tenant, Mobile Master Manufacturing, L.L.C. and; one for Richard L. Johnson. Mr. Johnson signed the second line by: Richard L. Johnson (C.E.O.). On the third signature line Mr. Johnson signed Richard L. Johnson for “Mobile Master Mfg. L.L.C.”
In seeking to avoid individual responsibility for the defaulted lease, Mr. Johnson argued that his signature followed by the word “for” Mobile Masters Mfg. L.L.C. was a clear intent to sign in a representative capacity and the Court of Appeals thus held that Mr. Johnson did not sign the lease in his personal capacity.
In overturning the Court of Appeals, the Tennessee Supreme Court noted that the clear and unambiguous language of the contract points to only one conclusion: Mr. Smith agreed to be personally responsible.
It is a bedrock principle of contract law that an individual who signs a contract is presumed to have read the contract and is bound by its contents. To hold otherwise would make contracts not “worth the paper on which they are written.”
So the moral of this case is, you better read and understand what you sign. If you have any questions, you may need to consult an attorney to help interpret the document. If you sign a contract the law presumes that you read and understood it.