Making Sneaky Changes to a Contract Before Signing It

In this post on his Connecticut Employment Law Blog, Daniel Schwartz tells an odd story, one that he first saw in Wolters Kluwer’s Employment Law Daily (here).

What Happened

An employee of Chanel’s fashion division was terminated. As a condition to being paid severance, she was asked to sign a “separation and release agreement” that, among other things, stated that the employee released the company from all claims, “including, but not limited to, claims of discrimination and harassment” and a bunch of other specified kinds of claims.

The employee signed the release agreement, but before doing so she re-typed the page containing the release language, using the same font and margins but changing “including” to read “excluding.” She didn’t discuss that change with the employer, though the parties dispute whether she used a yellow sticky note to flag it. Chanel claimed that it didn’t notice the change; it paid the employee $14,940 in severance.

Five months later, the employee filed a discrimination suit with a federal district court in New York, and Chanel moved to dismiss based on the release agreement. The court noted that it had to consider whether the waiver satisfied the relevant standards. It went on to hold that by changing the word “including” to “excluding,” the employee had “manifested an intent to preserve her right to file a discrimination claim.” Thus, she did not knowingly, willfully, and voluntarily waive her right to file a discrimination claim, regardless of whether the agreement, in either the unaltered or altered form, represented the agreement of the parties. Accordingly, Chanel’s motion was denied. (Go here for a copy of the opinion.)

My Thoughts

One hopes that this holding is of limited relevance, in that it applies to a motion to dismiss. I’d like to think that if it were to consider the employee’s case on its merits, the court would take into account the employee’s apparent subterfuge.

I say that because it’s not realistic to expect that parties to a contract are in a position to scrutinize every page of a signed contract looking for signs of deceit. A contract party shouldn’t be allowed to reap the fruits of trickery.

I particularly liked, as a matter of contract language, the idea of “excluding, but  not limited to.” In other words, I’m releasing you from all claims, excepts this stuff, and who knows what else! Changing “including” to “excluding” renders the release language nonsensical.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.