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L'Estrange v F Graucob

[1934] 2 KB 294, Court of Appeal (UK)

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.

Cigarette

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 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

Scrutton LJ

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).

However, this is not a ticket case and the law applicable is not the same. Here the document involved is signed. When the document is signed it is immaterial that a party has not read it and does not know if its contents. He is bound unless there has been fraud or misrepresentation. As there was no fraud or misrepresentation here the Plaintiff was bound by the exclusion clause.

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:

"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."

...

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.

[footnotes omitted; emphasis added]

Maugham LJ

Small printConcurred, 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, Lord Justice Maugham observed that it was 'unfortunate' that the important exclusion clause was 'in such small print'

 

Commentary