Home | Cases | L'Estrange v F Graucob

 

Key information

Court
Court of Appeal

Judges
Dillon LJ
Bingham LJ

Issues
Incorporation of terms

Full case
BAILII

AustraliaL'Estrange v F Graucob

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

 

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.  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.

Divisional Court (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.

Point

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.

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