L'Estrange v F Graucob Ltd [1934]

Court: Court of Appeal

Facts: Miss Harriet Mary L'Estrange, proprietor of a cafe, purchased a cigarette machine from Graucob. The sales agreement she signed included an exclusion clause in small print, disclaiming all express or implied conditions or warranties. The machine proved faulty, and L'Estrange refused further payments, claiming the machine was not fit for purpose. Graucob relied on the exclusion clause to argue they were not liable.

Issue: Was Miss L'Estrange bound by the exclusion clause despite not reading or understanding its contents?

Held: The Court of Appeal held that Miss L'Estrange was bound by the exclusion clause due to her signature on the agreement. The court emphasized that signing a document generally binds the party to its terms, regardless of whether they have read or understood them.

Key Judicial Statements:

• Scrutton LJ: Stated that a party who signs a contract is bound by its terms, as they are presumed to have read and agreed to the document. Exceptions to this principle include:

  • Non est factum: Where the signature was made under circumstances that do not constitute the party’s act.

  • Misrepresentation: Where the party was induced to sign due to fraudulent misrepresentation.

• Maugham LJ: Agreed, acknowledging the strict application of this rule but noting that exceptions exist.

💡 Leveluplaw: This case established the principle that signing a document binds a party to its terms regardless of whether they read or understood the contents. Modern consumer protection laws, such as the Unfair Contract Terms Act 1977, now provide some protection against unfair terms, requiring exclusions to meet the test of reasonableness. Despite its strict application, L'Estrange v F Graucob remains a cornerstone in contract law, illustrating the fundamental rule of contractual binding through signature.