L'Estrange v F Graucob
[1934] 2 KB 394; 103 LJKB 730; 152 LT 164; [1934] All ER Rep 16
Court of Appeal (UK)
Case details
Court
Court of Appeal
United Kingdom
Judges
Lord Justice Scrutton
Lord Justice Maugham
Appeal from
County Court
Issues
Incorporation of Terms
Relevance of signature
Fun fact
Lord Denning (then a young barrister) represented Graucob in this case
Commentary
JR Spencer, ‘Signature, Consent, and the Rule in L’Estrange v Gaucob’ (1973) 32(1) The Cambridge Law Journal 104-122 ➤
Overview
This case considered the effect of signature on contracting parties (in particular, in relation to exclusion clauses). The contract related to a cigarette vending machine.
The Court held that if the parties record their agreement in a document which they sign, then they will be bound by the written terms even though they don’t know what they are. This is because, by signing a document a person indicates to the world that they agree to the terms contained therein.
There are some limited exceptions:
Fraud
Misrepresentation
non est factum
statutory exceptions or limitations (for example, the Australian Consumer Law will render void unfair terms in consumer contracts, notwithstanding the contract has been signed)
This is very different from the position if the document containing the alleged terms has not been signed. In that case, a party is only bound by the terms if he is aware of them or should have been aware of them.
Facts
The Plaintiff entered into a contract to buy a cigarette vending machine. This contract was set out in a printed document which the Plaintiff signed. The machine did not work.
The Plaintiff sued for breach of an implied warranty that the goods were fit for purpose. Defendant relied on an entire agreement/exclusion clause in the contract which excluded such implied warranties.
The Plaintiff did not know that the contract contained this exclusion clause – it was, the Court noted, ‘in regrettably small print but quite legible’.
Trial judge
The Plaintiff was not bound by the exclusion clause because he did not know it was in the printed document and the Defendant had not done what was reasonably sufficient to give him notice of it. Plaintiff won.
Court of Appeal
Lord Justice Scrutton
The trial judge had relied upon the ticket cases to argue that notice had to be given of the terms of the document (here the exclusion clause).
“The main question raised is whether [the entire agreement clause] formed part of the contract. If it did, it clearly excluded any condition or warranty. In the course of the argument in the county court reference was made to the railway passenger and cloak-room ticket cases … In the present case the learned judge asked himself the ghree questions appropriate to these cases, and in answering them as found as facts: (i) that the plaintiff knew that there was printed material on the document which she signed; (ii) that she did not know that the document contained conditions relating to the contract; and (iii) that the defendants did not do what was reasonably sufficient to bring these conditions to the notice of the plaintiff.
The present case is not a ticket case, and it is distinguishable from the ticket cases. In Parker v. South Eastern Ry Co Mellish LJ laid down in a few sentences the law which is applicable to this case. He there said (2 CPD at p 421):
"In an ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not read the agreement and does not know its contents."
Having said that, he goes on to deal with the ticket cases, where there is no signature to the contractual document, the document being simply handed by the one party to the other and continues:
“The parties may, however, reduce their agreement into writing, so that the writing constitutes the sole evidence of the agreement, without signing it; but in that case there must be evidence independently of the agreement itself to prove that the defendant has assented to it. In that case, also, if it is proved that the defendant has assented to the writing constituting the agreement between the parties, it is, in the absence of fraud, immaterial that the defendant had not read the agreement and did not know its contents.'“
In cases in which the contract is contained in a railway ticket or other unsigned document, it is necessary to prove that an alleged party was aware, or ought to have been aware, of its terms and conditions. These cases have no application when the document has been signed. When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.
The plaintiff contended at the trial that she was induced by misrepresentation to sign the contract without knowing its terms … The learned judge in his judgment makes no mention of that contention … and he pronounces no finding as to the alleged misrepresentation … There is no evidence that the plaintiff was induced to sign the contract by misrepresentation.
In this case the plaintiff has signed a doucment headed “sales agreement,” which she admists had to do with an intended purchase and contained a clause excluding all conditions and warranties. That being so, the plaintiff, having put her signature to the document and not having been induced to do so by any fraud or misrepresentation, cannot be heard to say that she is not bound by the terms of the document because she has not read them.”
[footnotes omitted; emphasis added]
Lord Justice Maugham
[Concurred, agreeing with the statement of Mellish LJ in Parker v South Eastern Ry Co that where signed it is immaterial that the party signing has not read its contents. Nevertheless, expressed some regret and observed that it was 'unfortunate' that the important exclusion clause was 'in such small print'].
“I regret the decision to which I have come, but I am bound by legal rules and cannot decide the case on other consideration.
The material question is whether or not there was a contract in writing between the plaintiff and the defendants in the terms contained in the document which she signed.
…
In the present case … an order form … was signed by the plaiontiff. It was an elaborate form containing a number of clauses, and among them certain terms and conditions in regrettably small print, but quite legible. The plainff, having signed that document, gave it to a canvasser of the defendants, who took it away. … If the document signed by the plaintiff was a part of a contract in writing, it is impossible to pic out certain clauses from it and ignore them as not binding on the plaintiff.
… it is wholly immaterial whether the plaintiff read the small print or not. There can be no dispute as to the soundness in law of the statement of Mellish LJ in Parker … to the effect that where a party has signed a written agreement it is immaterial to the question of his liability under it that he has not read it and does not know its contents. …
There are, however, two possibilities to be kept in view. The first is that it might be proved that the document, though signed by the plaintiff, was signed in circumstances which made it not her act. That is known as the case of “non est factum” … [that was not the case here].
Another possibility is that the plaintiff might have been induced to sign the document by misrepresentation. [His Honour concluded that was not the case here].
In this case it is, in my view, an irrelevant circumstance that the plaintiff did not read, or hear of, the parts of the sales document which are in small print, and that document should have effect according to its terms. I may add, however, that I could wish that the contract had been in a simpler and more usual form. It is unfortunate that the important clause excluding conditions and warranties is in such small print. … “