L'Estrange v F Graucob Ltd [1934]

L'Estrange v F Graucob Ltd [1934] 2 KB 394 is a significant English contract law case that addresses the incorporation of terms into a contract by signature, particularly focusing on the exceptions to the general rule that a person is bound by their signature. The case involves an exclusion clause in a sales agreement and explores whether the party signing the agreement is bound by its terms, even if they did not read or understand them.

Miss Harriet Mary L'Estrange, the proprietor of a cafe in Llandudno, purchased a cigarette machine from Graucob's slot machine business. The sales agreement she signed included an exclusion clause in small print, stating that any express or implied conditions, statements, or warranties not mentioned in the agreement were excluded. The machine proved faulty, and Miss L'Estrange refused further payments, claiming that the machine was not fit for purpose. Graucob argued that the exclusion clause in the signed agreement precluded any warranties for fitness.

The County Court judge, following Lord Herschell's principles in Richardson, Spence & Co v Rowntree, held that Graucob could not rely on the exclusion clause. The judge found that Graucob had not done enough to give notice of the exclusion clause to Miss L'Estrange.

The Court of Appeal, however, overturned the decision. Scrutton LJ held that the exclusion clause formed part of the contract, and L'Estrange was bound by it because she had signed the agreement. He emphasised that the signing party is deemed to have read and agreed to the terms of the contract, regardless of whether they actually read it. Maugham LJ concurred, expressing regret at the result but stating that, in law, the document should have effect according to its terms.

The case establishes a fundamental principle in English contract law: when a party signs a written agreement, it is generally immaterial whether they have read the document or know its contents. The signature binds the party to the terms of the contract. This principle is particularly relevant in commercial transactions where parties of equal bargaining strength are involved.

However, it is important to note that if the case were to arise today, consumer protection legislation and unfair terms regulations would likely impact the outcome. The Unfair Contract Terms Act 1977 and the Sale of Goods Act 1979 impose restrictions on excluding certain terms, especially in consumer contracts.

Despite criticisms and the evolution of consumer protection laws, L'Estrange v F Graucob remains a landmark case, emphasising the general enforceability of contractual terms signed by the parties, with exceptions such as fraud, misrepresentation, and non est factum.
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