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Citing the general rule that a party who signs a contract is presumed to know its contents, a state court in Tennessee enforced a clearly written arbitration clause which both parties signing the agreement claimed not to have read.
In Reno v. SunTrust, Inc., NO. E2006-01641-COA-R3-CV, 2007 WL 907256 (Tenn. Ct. App. Mar. 26, 2007), Reno sued to enforce a life insurance rider (the Rider) to a mortgage agreement with SunTrust. SunTrust denied the benefits claim, alleging misrepresentations by the Renos during the application process.
When SunTrust moved to compel arbitration under the terms of the Rider, Reno argued that the arbitration clause was unenforceable because neither she nor her husband, nor the agent signing for the bank, knew of or understood the arbitration clause. Therefore, Reno alleged a lack of "meeting of the minds" on an agreement to arbitrate.
In rejecting Reno's argument, the Court held that because the Renos had ample opportunity to read and question the terms of the agreement, the fact that they did not do so would not absolve them of the duty to comply with its clearly written terms.
The Court also noted that the arbitration portion of the agreement was presented twice in the Rider: once in the only boldface type on the page, and again just above the signature line. Additionally, the Court found no legal authority to support the notion that an employee acting as an agent must be aware of and understand every portion of the contract.
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