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Kalathia v. PMM, Inc.

A-1616-09T1 (N.J. Super. App. Div. 2010) (Unpublished)

CONTRACTS; MISREPRESENTATIONS — Even though a contract may clearly and unambiguously preclude any cancellation, the party who signed the contract based on an oral misrepresentation by the other may cancel the contract where the oral misrepresentation was that the contract could be cancelled within a given time period and there were no facts to the contrary, it was not obvious that cancellation would not be permitted, and there were no circumstances that would lead the signing party to believe that the contract could not be cancelled.

A match making service and an individual customer contracted for dating services in exchange for a fee. The match making service offered the customer a one-time discount of $1,000 if a contract were immediately signed. The customer did not read the contract before signing, and the contract did not memorialize an oral representation made by the salesperson that the customer had three days to cancel. Rather, the contract stated that there was no provision for cancellation. The customer attempted to cancel the next day and was refused.

The contract consisted of a single sheet of paper with eighteen numbered paragraphs. The paragraphs were comprised of ninety-two lines containing nearly 1,400 words, in an area measuring five-and-one-half inches by eight inches. The print size was extremely small; the letters approximately one-sixteenth of an inch high. The paragraph with the clause about cancellations was not in a separate sentence or paragraph, nor placed under a separate heading. During a bench trial, the customer testified that he did not read the contract prior to execution. The lower court found that the salesperson’s oral misrepresentation about the right to cancel violated the Consumer Fraud Act (CFA) and awarded treble damages and counsel fees.

On appeal, the match making service argued that any oral representation of a cancellation period was irrelevant because the contract clearly and unambiguously precluded any cancellations. The Court noted that reliance on a misrepresentation is justifiable when facts to the contrary were not obvious or did not provide a warning that circumstances may be to the contrary.

Here, the Court noted that the $1,000 signing bonus influenced the customer’s decision and had the effect of causing the customer to rush the signing. Further, the oral representation of the existence of a cancellation period provided the customer with misguided comfort, and reduced the need for careful reading of the contract before signing. Noting that a customer need not prove an intention to deceive, the Court deferred to the lower court’s determination that the customer reasonably relied on the misrepresentation.


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