L’Estrange v Graucob (1934)

English Contract Law

L'Estrange
‘Expert Salesman’ by Norman Rockwell

‘Reading the small print’ is a phrase familiar to discerning consumers, and in so this instance the value of careful reading served to remind that contracts of all shapes and sizes require careful attention, especially when the text is not readily visible.

In 1933 two travelling salesmen paid a visit to a small community café in Wales in order to sell them an automatic cigarette vending machine, and so having spent a number of hours discussing the user benefits and attached payment terms, the respondent duly agreed to sign the partially completed ‘sales agreement’ in expectation of a new and fully working product.

Upon payment of the deposit the appellants returned a signed ‘order confirmation’ and accompanying eighteen-month guarantee, at which point the contract was well underway and instalments were regularly paid, however after a period of less than a few days the machine began malfunctioning and several engineer visits were arranged before at the point of exhaustion, the respondent requested the item be returned in forfeit of her deposit.

In spite of this the appellants refused to terminate the transaction, whereupon the respondent commenced litigation for return of the monies paid on grounds that the product had been unfit for purpose and thus contrary to the contract and guarantee, while the appellants counter-claimed their remaining costs owed for the purchase of the machine before the respondent amended her claim to include repayment for failure to provide full consideration, breach of implied condition that the vending machine was functioning at point of sale, and/or damages for breach of implied warranty that the product was fit for purpose.

The argument cited by the appellants relied upon an absence of failed consideration and non-existence of implied conditions as per s.11(c) of the Sale of Goods Act 1893  which read that:

“Where a contract of sale is not severable, and the buyer has accepted the goods, or part thereof, or where the contract is for specific goods, the property in which as passed to the buyer, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there be a term of the contract, express or implied, to that effect.”

Thus no implied warranty existed on grounds that the signed sales agreement excluded both condition and warranty within the small print shown at the bottom, which read that:

“[T]his agreement contains all the terms and conditions under which I agree to purchase the machine specified above, and any express or implied condition, statement, or warranty, statutory or otherwise not stated herein is hereby excluded…”

Whereupon the respondent contended that she had been induced to sign the agreement through misrepresentation on grounds of never having her attention drawn to the exclusion notice beforehand.

In the first instance the Carnarvonshire County Court awarded a sum of 70l for the respondent in light of a perceived breach of the warranty despite her signature and no evidence of misrepresentation, and further allowed the appellants the sum of 71l for the monies unpaid.

Having appealed in the Court of the Kings Bench the appellants argued again that no misrepresentation had occurred, and that at any point the respondent was free to note and enquire as to the limitations of the contract, but had waived that right when signing to the terms expressed.

Here the Court relied upon the principles used in Parker v South Eastern Railway Co, in which the Court of Appeal had held that:

“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.”

Which translated that despite recognition of the respondent’s misfortune the law could not enforce a claim for misrepresentation based upon the oversight of a party willing to contract, thus the court set aside the respondent’s award and upheld that of the appellants, while reminding both parties that:

“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.”

Author: Neil Egan-Ronayne

Author, legal scholar and foodie...

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