Lack of complete information on arbitration agreement does not make it void
The nursing home filed a motions to compel arbitration. May Robinson had indicated that she did not have capacity to consent to an arbitration agreement. T.C. Robinson signed the agreement attached to the amended motions and indicated his relationship to May Robinson as “Husband” but did not indicate on what authority he had to represent May Robinson nor does May Robinson’s name appear on the agreement.
A lower court denied the nursing home the right to compel arbitration based on the fact that the agreement on its face was lacking any indication of T.C. Robinson’s authority to sign on his wife’s behalf. In an appeal, the court found that the lower court’s decision was in error. The error lay in that although the husband did not indicate in writing his authority on his wife’s behalf that he did so instead by his conduct and his words.
The legal term for that is parol evidence. What parol evidence essentially means is that because T.C. Robinson presented himself by his words and conduct to be in agreement with the arbitration agreement and to have the authority to sign for May Robinson and because May Robinson presented herself as not having the capacity to consent to an arbitration agreement, by their words and deeds the Robinson’s indicated that T.C. Robinson had the authority to sign and that he was in agreement with the arbitration agreement even if the written documents did not support that conclusion.
Parol evidence can be used in several ways. One way that the court looks at it is to say that if the parties to an agreement have a contract than extraneous evidence outside of that contract cannot be used in addition to the contract. The point is to preserve the integrity of the contract. One example is if two parties sign a sales contract for a specific remuneration but then verbally indicate something different, the contract still holds and the courts will not look to any addition information that is not indicated in the original document. The point is to prevent either party from being able to alter the meaning of the document. But the court can also choose not to apply the parol evidence rule in the case where the evidence is contradictory such as when a contract has been signed under duress, mistake, fraud or undue influence or if the evidence shows the existence of a separate agreement between the parties such as might occur in a particular trade or industry.
For instance, if as a consumer you sign a contract in which someone representing the company indicates that you can cancel the contract, even if the contract explicitly states it cannot be cancelled, the consumer has the right to cancel the contract.
So the court ruled that the lower court should have permitted the nursing home to present parol evidence addressing the ambiguity of whether or not May Robinson had assented to the arbitration agreement in the absence of her signature or whether T.C. Robinson had the authority to sign for May Robinson. The higher court reversed and remanded the case for further proceedings.