Illiteracy and Contract

NAAL Studies

Literacy is, to varying degrees, 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 years of age 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, oversampling minority populations in order to provide an accurate assessment of the state of literacy among such groups. For the purposes of entering most contracts only prose and document literacy are necessary.

Below Basic Literacy

At the level of below basic literacy in prose a person has the ability to locate easily identifiable information in short, commonplace texts. One example of what an individual with below basic prose literacy skills can do is searching a short, simple text in order to find out what an individual may drink before a medical test. 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.

Prevalence of Below Basic Literacy in the United States

It is reasonable to assume, however, that an individual only possessing such below basic literacy skills would find it impossible to understand even the most standard form contracts without some kind of guidance. In order to understand the written terms and conditions of a contract without the aid of a third party, an individual would need to be of at least the basic level of literacy in both prose and document categories. 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.

Contract Law

Regarding Illiteracy

Despite being unable to read and understand their contracts’ terms and attendant effects, illiterate adults are often afforded precious little protection under the current system of law concerning the issue. 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, 541 F.3d 218, (2008). 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.” 27 Williston on Contracts § 70:113 (4th ed.). The general push of contract law in regard to illiteracy is that being unable to read the terms of the contract, therefore unable to understand to such terms, is no defense except in the case of fraudulent misrepresentation.

Protections Afforded

There are several examples of contract doctrine that suggest the view currently expressed and accepted by courts and legal thinkers is in shaky territory. The notion that a meeting of the minds is necessary for the formation of a contract, while no longer the standard for contract law, is still somewhat informative; its vestiges remain scattered throughout the case law and contract doctrine, and the idea that an illiterate person can be held to the terms of a contract that were unexplained flies in the face of it. 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.

Similar Situation, Protection Should Be Extended

The case of an illiterate person is situationally similar; they are mentally limited, in a way literate people are not, and cannot comprehend the terms on a level equal to literate people. Illiterate persons cannot understand the future repercussions of the terms of a contract they cannot read, and so deserve the same protections afforded to minors in the event that the terms remain unexplained.

Conclusion

What May Be Accomplished

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 such situations. The majority of cases I’ve found on the subject involve banks and contracts for loans, so it could be reasonably assumed that the illiterate party had a legitimate fear that, if discovered illiterate, they would not be able to get the loan, or would incur less favorable terms of interest and payment. If illiterate persons were given protections in contract law similar to those extended to minors, and illiteracy were to become an economic burden on influential financial institutions, then such institutions may find it in their interest to fund programs to promote literacy.

What puzzles me a little bit is the idea that illiteracy is a new problem for which the law needs to make provision by analogy. Surely it occurs to you that the law we use is law fashioned in an almost entirely illiterate culture, and that the law of contract over the last thousand years has assumed both that most contractors can't read or write and that oral contracts are as valid as written ones? The idea that illiterate people are children, unworthy of serious business, would not have appealed to the aristocrats of medieval Europe, nor to most of the merchants of a medieval city. Early modern literacy in England measured by the sort of scale you use here would have resulted in numbers rather poorer than the bulk of India today. (And one should always remember Kerala, where after two generations of elected Communist government, literacy in the second-poorest state in India is roughly at the level of the United States.)

So the rules for the binding nature of contracts a party couldn't read are hardly recent inventions to deal with a pocket problem. They are the basic principles made of a combination of English local justice extending back long before the Norman Conquest, and the particular and complex history of English royal justice's long association with the written document under seal. To treat the illiterate as incompetent, moreover, would hurt not the banks, but illiterate persons themselves, who have every reason to prefer a dangerous autonomy to an undignified incapacity that would deprive them of their livelihoods and independence.