Illiteracy and Contract

NAAL Studies

Literacy is a problem for many adults in the United States. The National Assessment of Adult Literacy (NAAL) study from 2003 provided a measure of the literacy rate for persons over 16 in the United States. The study operates by dividing literacy into three categories (prose, document, and quantitative), four levels (below basic, basic, intermediate, and proficient), taking a randomized sample of over eighteen thousand persons. For the purposes of entering most contracts only prose and document literacy are necessary.

At the level of below basic literacy in prose a person has the ability to locate easily identifiable information in short, commonplace texts, such as lists of food to take with medication. Below the basic level of document literacy a person is only able to locate easily identifiable information. One example of an action that can be performed with only below basic document literacy would be following written instructions in simple documents to be able to perform actions such as signing a document. An individual who possesses these below basic skills would have little problem entering a contract by locating and signing the necessary portion of a contract.

It is reasonable to assume, however, that an individual only possessing such below basic literacy skills would find it impossible to understand most standard form contracts without some kind of guidance. The 2003 NAAL study found 14% of Americans aged 16 or older are below the basic level of prose literacy, while 12% are at a similar level in relation to document literacy. By these numbers it would be safe to say that likely 10% of adults in the United States are below the basic level of prose and document literacy, and do not possess the ability to read and comprehend the terms of a contract. Essentially, they are illiterate.

Law

Despite being unable to read and understand their contracts’ terms and attendant effects, illiterate adults are afforded little protection under the current system of law. Courts have held, on both the federal and state levels, “the fact that an offeree cannot read … is immaterial to whether an English-language agreement the offeree executes is enforceable.” Morales v. Sun Constructors. Additionally, it has been stated that “[a] party is charged with knowing the terms and conditions in a contract if that party is able or has had the opportunity to read the agreement. That same party is under a duty to learn the contents of a written contract before it is signed and if … that party fails to read the contract or otherwise learn its contents, then the signer takes pen to paper under the peril of being bound by that which is signed.” Wilson on Contracts (4th ed.). In general, not reading or not understanding the terms of a contract, when due to illiteracy, is no defense except in the case of fraudulent misrepresentation. However, in other situations protections are extended to those who do not read or do not understand the terms of a contract.

For instance, it is commonly held that an individual may not be held to the terms of a contract which was entered into as a minor; the logic being that, as a minor, a person is mentally immature and not able to comprehend the terms on a level equal to non-minors, and therefore must be protected. Essentially, because minors are believed not capable of understanding the terms, and their future repercussions, there is not, and can never be, a meeting of the minds. The case of an illiterate person is similar; they are limited in a way literate people are not, and cannot comprehend the terms on a level equal to literate people without assistance. Illiterate persons cannot understand the future repercussions of the terms of a contract they cannot read and which remains unexplained, which would seemingly warrant similar protections afforded to minors in the event that the terms remain unexplained. Furthermore, the doctrine of unconscionability is employed to protect parties form vague and confusing contract terms which lead to a lack of understanding between the parties, and could be applies to illiterates as well.

If illiterates are given protection in contract, then they must not be discriminated against because of this protection. Antidiscrimination legislation in the US stems from footnote four in United States v. Carolene Products Co., and since the entire case dealt with the protection of illiterate people from unscrupulous business practices a reasonable argument could be made that footnote four protections should be extended.

Conclusion

While illiteracy is not a new issue, its increasing rarity has made it more a problem than in the past. The Supreme Court, in Carolene Products, recognized the need to protect illiterate citizens from unscrupulous business practices, and in Plyler v. Doe stated that “[i]lliteracy is an enduring disability. The inability to read and write will handicap the individual . . . each and every day of his life.” In a society where, for the past century, the law has been developed by the literate class to suit their needs, and where nearly 90% of the population has beyond basic literacy skills, illiterate people are put at a distinct disadvantage, and their rights deserve special protection.

As the law stands it is the duty of the illiterate party to learn the meaning of the contract’s terms, and they are held responsible upon failing to do so. This standard fails to take into account the extreme social pressure put on the illiterate party in contract situations. It could be reasonably assumed that an illiterate party to contract has a legitimate fear that, if discovered illiterate, they would not be able to enter the contract, or would incur less favorable terms. If illiterate persons were given protections in contract law similar to those extended to minors, and illiteracy were to become an economic burden on those institutions seeking to take advantage of illiterates, then such institutions may find it in their interest to fund programs to alleviate illiteracy.