Note that merely obtaining a signature under false pretenses is a crime. Of course, the definition of "false pretenses" is the sticking point. Technically, the customer did not make any false representations. It seems he merely expected the bank not to notice his "proposed" contractual changes. That would not seem to satisfy the elements of the crime, though I wouldn't bet my own freedom on that.
Regarding bad faith: It would be interesting to see if the court would find a breach of the implied covenant of good faith and fair dealing. It's iffy. Generally, such a breach would arise from either party's conduct outside the signing of the contract itself. I.e. you do something underhanded to thwart the other party's enjoyment of his contractual rights, without breaching any specific term in the contract.
Could a breach of the implied covenant arise from the negotiation process itself? In my cursory search, I didn't come across any cases like that, but they could exist. In this case, there does seem to be some willful deception on the customer's part. One could argue, based on the circumstances, that he expected the bank not to notice his alterations. Perhaps this would be considered bad faith.
One could also argue that the contract is void as there was no meeting of the minds. This can be a difficult case to make when there is a written contract. Nonetheless, in unusual circumstances, which this appears to be, a written contract can be voided for this reason. Here, one could argue that the two parties thought they were signing contracts containing radically different text, and thus there was no meeting of the minds.
Note that you can't just claim this any time you want to get out of a written contract. The default assumption is that your signature indicates you read and understood the contract. You have to show some unusual circumstance--such as one party's surreptitious alteration prior to signing--if you want to claim there was no meeting of the minds. And even then, a win is far from guaranteed.
If the bank can claim fraud because you changed the terms and conditions hoping they wouldn't notice, could we claim fraud for them sending the initial T&C in such small print hoping we wouldn't notice them? It should go both ways as the banks are trying to hope you don't read the terms and conditions.
The bank can claim that all it wants, but this whole idea of "I didn't read the contract I signed" has never been a valid defense. Even in the case of those online Terms of Use, only recently has anyone been able to get a court to agree that they're even slightly unreasonable. But a physical contract like this? Sure, you can say, "I didn't read it", but the judge will just say, "You probably should have." and rule against you if that's your only defense.
You're right that "I didn't read the contract" is an invalid defense in the general case. However, this is an unusual situation. The peculiar circumstances would likely lead the bank to believe they were signing a different contract which they had in fact read. And there is (arguably) some willful deception on the customer's part.
In other words, it's not just carelessness on the bank's part. That alone would not be a sufficient argument. Rather, it's carelessness coupled with the customer's willful exploitation of that carelessness. That may be enough to tip the scales in the bank's favor.
>>> Regarding criminal fraud: That might be tough to prove.
The problem is that fraud charge may be hard to prove, but may be much easier to initiate. And criminal investigation, even not resulting yet in a charge, may be rather annoying matter. For example, they could get (given a friendly judge) an order to seize all your computer equipment to look for signs of fraudulent activity. And keep "looking" for years, while you can't use them. And so on. If they arrange a cooperation of a friendly prosecutor, they can cost you lots of money while never getting to the court. Since they are paid by the taxpayers and you're not, you lose.
He couldn't afford to pay the credit card bills after 2 years what makes you think this guy has a lot of electronics in his house.
I would wager he probably has 1 crappy old computer a printer and a smartphone (just my guess as an eastern European).
He could care less if all that crap gets locked off.
As far as I can tell even that fact that he kept his end of the contract to the best of his abilities for 2 years can be used as proof that he isn't fraudster.
If we assume that at least some unethical prosecutors exist (which seems verifiable) then this risk exists any time you do something to annoy someone who has influence over said unethical prosecutors. So then it's no longer a question of what the law is, but of pure, cynical politics. When you get into that realm, all bets are off.
Under normal circumstances, there is no negotiation when a bank sends you a credit card application. They expect you to just fill it out and send it back unaltered. Since this is the expected way to handle credit card application contracts, I expect the bank could easily argue that there was no meeting of the minds, as they could not have been expected to re-read the entire contract looking for alterations, and in fact it's reasonable to argue that the man who altered the contract did so knowing the bank would never notice.
The bank sends you an agreement that you did not ask for. Why would it be different for the customer to send back a signed contract the bank did not ask for?
Customers are always cautioned to read the fine print. I would not know why this would not be valid advice for banks (or any other business) as well.
Because the bank can reasonably expect to be sent back the contract they sent out, not an altered copy, unless they are specifically told that there are changes. If the guy sent his altered contract with a cover letter that mentions changes (which the bank ignored), he may have a case. Otherwise it's clearly deceptive.
"Alexeev then sent his updated agreement to the bank, and shortly thereafter received the bank's signed and certified copy, as well as a credit card."
It's been a while since I signed up for a new credit card, but I don't recall getting back anything "signed and certified." Terms and what-not, sure, but that sounds like the bank sent back his (updated) contract.
Apparently, I've gotten more houses than credit cards, because that's exactly how you handle contract negotiations there.
>they could not have been expected to re-read the entire contract looking for alterations //
I don't think a bank will want to go down the line of arguing the contract shouldn't be binding because they shouldn't have to read the small print - that sounds like an overall loss for the bank in general.
The argument is not that you shouldn't read the small print - the bank lawyers know what the small print means - the argument is that they can't look for tiny changes in known small print if they're reasonably expecting it to be identical to what they sent.
That's like I would initiate a contract with you and after we read it together and you agree it's what you want to sign I covertly slip a page into the pack that completely changes the terms and trick you into signing it without you actually knowing it's there. You can reasonably claim you intended to sign the original one, not the one I secretly modified - and I expect the court be more sympathetic to you than to my claims "you should have watched my hands all the time!" Of course, it'd require you proving that I did this, but if you can, your case sounds pretty strong to me.
Slipping in an extra paper is not the same at all; you are adding terms to the contract that the signer could not possibly have seen. By changing the small print you are being sneaky, but they had a chance to fully examine what they were agreeing to and were lax in that.
>The argument is not that you shouldn't read the small print - the bank lawyers know what the small print means - the argument is that they can't look for tiny changes in known small print if they're reasonably expecting it to be identical to what they sent.
Doesn't this case show that they cannot reasonably expect the contract to be identical to what they sent, in respect to all future contracts?
1 - The bank signed a copy then gave one to the customer to sign. If the customer changed the print at this point, it would no longer be valid.
2 - What this guy did, the bank gave him a copy, he modified it, then signed it, then sent it back, to which the bank approved. Which is still technically valid.
This is what I would try to do if I were the bank. They would have to write off the credit card balance, because voiding the contract cuts both ways. But considering that the bank is potentially liable for much greater damages, it might make sense.
Will it work? It's hard to say. Courts are generally skeptical of the excuse that "I didn't read the contract."
Perhaps it comes down to this: Does a party who makes proposed edits have any obligation to point out such edits? Or does the responsibility lie wholly with each party to read the contract in its final form?
Good lucky going to court sayingthat you only read the credit card brochure so you thought you didn't have to read the contact before signing... Whichis exactly what the bank did.
If the bank get out of this one, and Russian contract law is the same, it will be going over all the precedence to this date.
My bet is that neither side will have it all. Contact will be upheld, but values will be ruled out of some legal common sense.
I have found some more info on good faith and fair dealing as it pertains to this type of case. Robert Summers' 1968 article "'Good Faith' in General Contract Law and the Sales Provisions of the Uniform Commercial Code" has a section on bad faith in the negotiation phase of contracts. That's exactly what we need.
I don't want to quote at length, and there's no particular passage that nails this case, but my overall sense from the article is that the contract could be voided for want of mutual assent. Or that perhaps even the contract could be judicially modified back to the bank's version.
Anyway, here's the most concise (heavily edited) quotation I could find from the article:
"There are many ways, short of fraud, by which one party can take advantage of another in driving a bargain. For example...his disinclination to read a printed form...At the least, if a person consciously takes advantage of such weaknesses, he acts in bad faith."
But, as of 1968, he said: "Case law under this section is scant." Has this changed? Quite probably. Do I have a Lexus or Westlaw account to find out? No.
I am honestly rooting for the guy. The way these contracts are made put the full burden on the customer and absolve the contract makers. I see similar things done with recent xbox TOS where you revoke your own right to make a class action lawsuit.
But in the end of the day, it's irrelevant, banks will use stronger language next time.
I'm not going to say that that all banks are angelic and innocent. But I would take the long view on this issue, and come down in favor of honesty and transparency in contractual negotiation. You may not like the victim in this case, but what if the same thing were done to a more sympathetic victim by a less sympathetic adversary?
> banks will use stronger language next time
Except that such language could be deleted by the customer. In this case, a customer has demonstrated an ability to make arbitrary changes to the contract. Assuming he is legally savvy, he should be able to alter any terms that would damage his case. This, of course, assumes that the contract is held to be enforceable. I still have strong doubts about that.
Could "false pretenses" also include the letter head on the document? If you were to scan the document, change the lettering and produce an exact replica except for the fine print, could that fall under false representation since the bank was not the author of the document.
Possibly. Though I could also argue that I've been in contract negotiations where drafts are edited by both parties and passed back and forth, yet one party's letterhead remains on the top. In other words, I could say the letterhead does not, as a matter of accepted convention, indicate that one party was the sole drafter.
Regarding criminal fraud: That might be tough to prove. See, for example, this part of Virginia's fraud law:
http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+18.2-178
Note that merely obtaining a signature under false pretenses is a crime. Of course, the definition of "false pretenses" is the sticking point. Technically, the customer did not make any false representations. It seems he merely expected the bank not to notice his "proposed" contractual changes. That would not seem to satisfy the elements of the crime, though I wouldn't bet my own freedom on that.
Regarding bad faith: It would be interesting to see if the court would find a breach of the implied covenant of good faith and fair dealing. It's iffy. Generally, such a breach would arise from either party's conduct outside the signing of the contract itself. I.e. you do something underhanded to thwart the other party's enjoyment of his contractual rights, without breaching any specific term in the contract.
Could a breach of the implied covenant arise from the negotiation process itself? In my cursory search, I didn't come across any cases like that, but they could exist. In this case, there does seem to be some willful deception on the customer's part. One could argue, based on the circumstances, that he expected the bank not to notice his alterations. Perhaps this would be considered bad faith.
One could also argue that the contract is void as there was no meeting of the minds. This can be a difficult case to make when there is a written contract. Nonetheless, in unusual circumstances, which this appears to be, a written contract can be voided for this reason. Here, one could argue that the two parties thought they were signing contracts containing radically different text, and thus there was no meeting of the minds.
Note that you can't just claim this any time you want to get out of a written contract. The default assumption is that your signature indicates you read and understood the contract. You have to show some unusual circumstance--such as one party's surreptitious alteration prior to signing--if you want to claim there was no meeting of the minds. And even then, a win is far from guaranteed.