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Read Your Financial Contracts, For Your Own Good

12 July 2016 No Comment

canstockphoto5096321We live in the era of legal agreement skimming. The first time many of us recall doing this was when first installing Apple iTunes. Back in the day, this was one of the first consumer applications many of us had to add to our computers. Halfway through the installation, we were greeted with a long legal agreement, pages and pages long. Beneath the agreement was a checkbox that read something like “I have read and understood everything written here”. Those of us with scruples started reading, but I’m willing to bet you stopped very quickly. The thing was just too long. Maybe you scrolled to the end so that Apple would think you were some kind of speed reader. Maybe you just stopped at the second line, clicked the box like a liar, and went about your life with nary a care in the world.

It was the perfect crime. Over the next few years, we breezed through many such legal documents, never so much as glancing at the particulars therein. We continue to do this, even when the privacy information contained in these word piles has important ramifications for how we will go on to live life. Still, we can’t be bothered. In most cases, this really doesn’t matter. The things you are signing up for are so general and so widely used that you aren’t signing away anything that a million other people aren’t likewise. But sometimes, ignoring the legal minutiae contained in these kinds of documents is enough to get you in real trouble.

Consider the case of payment protection insurance in the UK. PPI is a real product. People buy it because they worry that they might not be able to pay back a loan at some point in the future, because of an injury or divorce or other personal calamity. Unfortunately for many people living in Britain over the past decade, they didn’t want this coverage. It was sold to them in oblique legal text buried in the yawning folds of mortgage and lending contracts.

The thing is, it was all there in the writing. If, rather than simply rifling through the endless pages, initialling and signing as fast as humanly possible, the people had read the documents, they would have been protected. Perhaps that’s not realistic to hope for. If instead, the borrowers had requested careful reading on the part of their paid financial agent, perhaps the ensuing kerfuffle could have been avoided.

If you have been unaffected by PPI, take the time to learn the lesson that the less fortunate have had to learn. If you are in the process of engaging in any sort of complex financial undertaking, take the time to read the legalese, or at least have someone on your team who is charged with making sure that everything is above board. This is the role of financial lawyers and agents. If you do not feel yourself competent to carefully review complex agreements, pay someone to do it for you or don’t get yourself involved at all. The chances of losing great sums of money are too great.

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