Most people understand that signing a Krad v. BP Products North America, BP wanted to build a gas station on property owned by Dr. Krad. However, BP need only a portion of Dr. Krad’s property, not all of it. With the assistance of a real estate broker, BP approached Dr. Krad with a proposal to lease part of Dr. Krad’s property, and the discussions led to a letter of intent that described the approximate size of the parcel that BP would lease. Eventually, BP gave Dr. Krad a proposed lease agreement, and Dr. Krad signed it after a review by his attorney. Although a preliminary survey had been completed, the lease agreement did not contain a legal description of the leased property. Instead, it stated that another survey would be completed within sixty days after the lease agreement was signed, and the final survey report would be attached to it as an exhibit, subject to approval by both BP and Dr. Krad. In other words, the lease agreement would not be complete until Dr. Krad signed the final survey report.
After the lease agreement was signed, BP decided it needed more land than it had anticipated and ordered a final survey of a larger piece of Dr. Krad’s property, apparently without discussing it with Dr. Krad. The final survey report, which contained a legal description of the larger piece of property, was delivered by the broker to Dr. Krad at his office. The broker interrupted Dr. Krad while he was with a patient and asked him to sign the survey report so it could be recorded. Dr. Krad signed the report without reading it and without telling his attorney or asking his attorney to review the report, assuming that the report described the piece of property that was originally discussed.
Dr. Krad knew something was amiss when the construction equipment arrived and started site preparation outside the boundaries of the parcel he assumed he had leased to BP. Eventually, Dr. Krad sued BP, asking for additional compensation for the difference between the size of the parcel he thought he had leased and the size of the property actually described in the final survey report.
Dr. Krad lost at both the trial court level and in the Indiana Court of Appeals. As the Court of Appeals wrote,
Under Indiana law, a person is presumed to understand what he signs and cannot be released from a contract due to his failure to read it. . . . Mere neglect will not relieve a party of the terms of an agreement in the absence of some excuse for the neglect, such as fraud, trickery, misrepresentation, or breach of trust or confidence.
Although the court acknowledged that the final survey report was given to Dr. Krad “somewhat abruptly,” it found that neither BP nor the broker did anything fraudulent in getting Dr. Krad to sign it. He was free to accept it or to reject it. In addtion, the court pointed out that, without a legal description, the lease agreement was an unenforceable agreement to agree, and, if Dr. Krad had refused to sign the survey report, he could have walked away from the deal or he could have pressed BP for more money.
The moral of the story is simple: ALWAYS read things before you sign them. Indiana courts are clear on this point: Those who have signed an agreement are presumed to know what it says and will not be released from its terms because they chose not to read it. If you have any concerns or are unsure what you may be agreeing to, always contact an attorney, especially when you have already hired one!
Michael Smith, Attorney at Law Emily Angel, Legal Assistant