In a recent Northampton County Court of Common Pleas case several important aspects of confessions of judgement were discussed by the Court in the context of a landlord/tenant dispute. Confession of judgement is a powerful tool because it effectively prevents a debtor from having his or her day in Court. The Court noted that such power must be exercised fairly and with exacting precision. The Court reiterated that the determination of the validity of a confessed judgement rests upon a strict construction of the language, and any doubt as to validity must be resolved against the party entering the judgement.
This case illustrates the general rule that when an agreement attempts to incorporate by reference material contained outside the agreement itself, the agreement will not successfully incorporate a confession of judgment contained within the outside materials. This general rule would apply even when the same parties are involved and the subject agreement is merely a modification of the primary earlier document containing a confession of judgment.
The Court went on to discuss that a confessed judgment against a debtor is not enforceable against the signers of an indemnity or guarantee agreement. The indemnitor or guarantor must execute a confession of judgement to be bound by it.
The foregoing statement of a law by the Northampton County Court of Common Pleas is not new. However, it does emphasize the need for people involved in business transactions to take the time to scrutinize matters very carefully when the intent is for confessions of judgment to apply.
