Breaching contracts in cases of deceit

We are a small contracting business based out of Southern California. We entered into a contract with an advertising company, based out of North Carolina. (The contract and agreement was signed in CA, but the contract states that the laws of the state of North Carolina are used to interpret and enforce said contract). When we signed this agreement, we were explicitly told by the sales rep that we could cancel at any time if we are unhappy with the results. This was an outright lie, as our owner soon found out the agreement was for 3 years! He wrestled with the rep to try and get our contract cancelled since we were told we could since it has garnered ZERO results (which I know is legally beside the point, since there are no guarantees in advertising). We were told that we could not cancel and if we wanted out of the contract we would have to pay the full agreement price, or more than $22,000. The only other option we were given was a reduced ad size and a discounted rate of $749/month. This is where I fear we went wrong, since the owner of our company agreed to the lower rate and signed a totally new contract enforceable until Dec. 2019, BUT ONLY DID SO OUT OF FEAR.
And herein lies my question: Given that we were outright lied to upon singing the initial contract, is that sufficient grounds for us to escape liabilities enforceable by this contract? If so, having signed a renewed contract, can we still make this argument of deception since we entered the new agreement out of fear of legal retaliation for a contract that was forged in deception?

He truly was told by the rep that he had no other option and that he had better sign for the reduced rate or else be sued for the full amount. Essentially, he was scared and coerced using a document that bore his signature only through deception. By the way, the rep is no longer with the company. A copy of the contract T&Cs is attached. Thank you!


===> Personal details and contract redacted <===

Unfortunately, the documents you attached is not text searchable, but...

ecoworkz said:

We were told that we could not cancel and if we wanted out of the contract we would have to pay the full agreement price, or more than $22,000.

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The paragraph titled "FULL PAYMENT," which follows a paragraph titled "PAYMENT," which is initialed (I assume by you or someone with your company) states as follows: "Merchant agrees that full payment of the agreement price must be rendered in order for the terms of the agreement to be satisfied. The Merchant may cancel the agreement at any time, but must remit the FULL AGREEMENT PRICE upon cancellation."

This illustrates that your assertion that it was a "lie" for the sales rep to tell you that you could cancel at any time is wrong. It clearly says that "[t]he Merchant may cancel the agreement at any time."

Of course, whether the right to cancel is meaningful given the requirement to "remit the FULL AGREEMENT PRICE upon cancellation" is obviously debatable. However, these are clear and unambiguous terms to which your company agreed. Did you or whoever signed this document bother to read it before signing?

ecoworkz said:

Given that we were outright lied to upon singing the initial contract, is that sufficient grounds for us to escape liabilities enforceable by this contract?

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As noted above, you weren't lied to. Even if you had been lied to, if I hand you a contract and tell you, "it says X," but the contract doesn't say "X" and, instead, says "Y," it's incumbent on you to read the contract before signing it and discover that what I've told you is wrong (anyone who wants to succeed as a contractor needs to know and understand this). There are very few exceptions to this, and all of them that I know about apply only in the consumer context, which this isn't.

ecoworkz said:

If so, having signed a renewed contract, can we still make this argument of deception since we entered the new agreement out of fear of legal retaliation for a contract that was forged in deception?

He truly was told by the rep that he had no other option and that he had better sign for the reduced rate or else be sued for the full amount. Essentially, he was scared and coerced using a document that bore his signature only through deception.

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If I want you to do something, you can be darn sure that I'm going to try and scare you into doing it by telling you that your refusal to do the thing will result in all sorts of horrible consequences. If you fall for that, that's on you, not me. What your boss could and should have done was say, "I'll think about it," and consult with an attorney.

Bottom line: Nothing in your post suggests your company has any recourse -- especially since a new agreement has been signed.

Thank you for taking the time to review and respond to this post. We are going to chalk this up as a learning experience and ride out the contract.

basic business principle -- don't sign contracts or agreements without fully understanding them and/or possibly passing them by your own legal counsel (and don't go by a verbal understanding with a salesperson!)

Don't ever sign a document out of fear! I question the business judgment of an business owner who not only made the first mistake but then a second. What exactly what he/she fearful of?

In the end you all signed 2 bad contracts with the same company? This is on you moreso than on them! If you want to run a company/business, next time get some good legal advice... It sure won't cost you $22k!