Did you read that contract and fully understand your obligations before signing it? Almost every day, we are faced with new terms and conditions for the mobile app we can’t live without. Most people do not take the time to read every word before we hit “I agree” to those new terms and conditions. While the impact of these terms and conditions may not be felt on a daily basis, upon your acceptance, you are bound by these newer terms and conditions as if you read and understood them. While there are certain instances where the terms of a contract cannot be enforced, such as when a contract is unconscionable, when the terms of a contract are clear and unambiguous, the plain language of the contract will be enforced accordingly. This was the subject of a December 5, 2014 opinion of the Fifth District Court of Appeal of Florida in Thyssenkrupp Elevator Corp. v. Hampton Manor at Deerwood, LLC.
In this very recent case, Thyssenkrupp and Hampton Manor had entered into an elevator maintenance contract for a term of five years. Thyssenkrupp provided the services for the entire five-year term. At the end of the five-year term, the contract automatically renewed for an additional five years and continued to automatically renew for additional five year terms thereafter, which is when the trouble began.
During the second five year renewal period, Hampton Manor failed to pay for work performed by Thyssenkrupp in the amount of $1,157.14. The contract provided that upon failure to pay an overdue invoice, Thyssenkrupp could either: 1) suspend all service until all amounts due had been paid in full or 2) declare all sums for the unexpired term of the contract due immediately and terminate the contract. Thyssenkrupp selected option two and filed a lawsuit against Hampton Manor for the unpaid invoices and for all sums due for the unexpired term of the contract.
At summary judgment, Thyssenkrupp provided the elevator maintenance contract, the unpaid invoices and an affidavit of its corporate representative who testified as to all the amounts due and owing to Thyssenkrupp from Hampton Manor totaling $30,259.71, which included the remaining amount due for the unexpired term. Harbor Manor argued that Thyssenkrupp’s corporate representative’s affidavit did not comply with Florida Rules of Civil Procedure 1.510(e), which requires that affidavits must (i) be made on personal knowledge, (ii) set forth facts as would be admissible in evidence and (iii) affirmatively show that the affiant (the person providing the testimony) is competent to testify to the matters provided in the affidavit.
The trial court disagreed with Hampton Manor, finding that Thyssenkrupp’s corporate representative’s affidavit complied with Rule 1.510(e), and ruled in favor of Thyssenkrupp. However, the trial court only awarded Thyssenkrupp $1,157.14, the amount of the outstanding invoices and did not award damages for the unexpired term of the contract in the amount of $29,102.57. Disappointed with the result, Thyssenkrupp appealed the trial court’s award. The Fifth District Court of Appeal of Florida found that the clear and unambiguous language of the elevator maintenance contract entitled Thyssenkrupp to recover the monthly fee for the remaining term of the contract upon Hampton Manor’s default.
When the terms of a contract are clear and unambiguous, a court has no right to give it a meaning other than what is expressed. Quoting a Florida Supreme Court case, the Court provided that “[t]o hold otherwise would be to do violence to the most fundamental principle of contracts.”
Because Thyssenkrupp and Hampton Manor had contractually agreed that Thyssenkrupp could cancel the contract and accelerate the remaining term in the event Hampton Manor failed to pay an outstanding invoice, Thyssenkrupp was entitled to damages for the unpaid invoices in the amount of $1,157.14 and damages for Hampton Manor’s breach in the amount of $29,102.57.
The moral of this story is to make sure that, as an association board member, you read and understand every term of a contract before casting your vote in favor of that contract. To do otherwise can cause significant monetary damages.