Laws on Incorporation into Contracts by Signature
The Issue was: ‘Incorporation into Contracts by Signature’
Law on the Issue
L’Estrange v. Graucob [1934] 2 KB. 394
A woman signed a contract for the purchase of a cigarette vending machine without reading the contract. The contract contained an exclusion clause, which took away all her rights under the Sale of Goods Act. The machine proved faulty and it was held that the sellers could rely on the clause because the purchaser had signified her consent to the terms of the contract by signing it and so the exclusion clause effectively exempted liability for breach.
Application of the Legal Principle in the Law to the Issue
It was held that the claimant’s claim failed. The claimant had signed the order form and so she was bound by the exclusion clause. According to Scrutton LJ: ‘When a document containing contractual terms is signed, the party bound and it is wholly immaterial whether he has read the document or not. The claimant having put her signature to the document cannot be heard to say that she is not bound by the terms of the document because she has not read them. Similarly, in the case of Lucky Corporation v Badluck, Badluck CEO Mr. Smith presented Luckys’ CEO Mr. Big with a form containing an agreement to transport which outlined the date and cost of delivery as stated above. The form also stated”please read Condition of Contract prior to signing” Mr Big sign the form but did not read the condition.The condition include an exclusion exempting Badluck from all losses however caused.
The Conclusion
The person wishing to rely on the exclusion clause must show that it formed part of the contract. An exclusion clause can be incorporated in the contract by signature, by notice, or by a course of dealing. If the plaintiff signs a document having contractual effect containing an exclusion clause, it will automatically form part of the contract, and he is bound by its terms. This is so even if he has not read the document. My advice to Lucky
Law on the Issue
L’Estrange v. Graucob [1934] 2 KB. 394
A woman signed a contract for the purchase of a cigarette vending machine without reading the contract. The contract contained an exclusion clause, which took away all her rights under the Sale of Goods Act. The machine proved faulty and it was held that the sellers could rely on the clause because the purchaser had signified her consent to the terms of the contract by signing it and so the exclusion clause effectively exempted liability for breach.
Application of the Legal Principle in the Law to the Issue
It was held that the claimant’s claim failed. The claimant had signed the order form and so she was bound by the exclusion clause. According to Scrutton LJ: ‘When a document containing contractual terms is signed, the party bound and it is wholly immaterial whether he has read the document or not. The claimant having put her signature to the document cannot be heard to say that she is not bound by the terms of the document because she has not read them. Similarly, in the case of Lucky Corporation v Badluck, Badluck CEO Mr. Smith presented Luckys’ CEO Mr. Big with a form containing an agreement to transport which outlined the date and cost of delivery as stated above. The form also stated”please read Condition of Contract prior to signing” Mr Big sign the form but did not read the condition.The condition include an exclusion exempting Badluck from all losses however caused.
The Conclusion
The person wishing to rely on the exclusion clause must show that it formed part of the contract. An exclusion clause can be incorporated in the contract by signature, by notice, or by a course of dealing. If the plaintiff signs a document having contractual effect containing an exclusion clause, it will automatically form part of the contract, and he is bound by its terms. This is so even if he has not read the document. My advice to Lucky