8 September 2011 | Andy Nolan
The origin of the phrase ‘read the small print’
Miss L’Estrange owned a café in Llandudno in Wales. A pair of salesmen representing F Graucob Ltd came to visit her. She purchased a cigarette machine and signed a document entitled “sales agreement”.
In small print, an exclusion clause stated: “This 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.”
L’Estrange did not read the agreement before signing. After the machine was delivered it did not work, despite mechanics coming to fix it. She refused to continue paying her instalments and brought an action for the sums already paid, arguing the machine was not fit for purpose. Graucob contended that any warranties for fitness were expressly excluded by the contractual agreement she signed.
It was held (on appeal) that L’Estrange was bound by the agreement. Lord Justice Scrutton said that in cases where there is a written but unsigned document “it is necessary to prove that an alleged party was aware, or ought to have been aware, of its terms and conditions” but “these cases have no application when the document has been signed.” He added: “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.”
If the same facts arose again today in relation to a consumer, the case would be regulated by unfair terms legislation and the Sale of Goods Act. However, the case still holds significance. A signature is a universally accepted formal device by which a party confirms its agreement to the terms contained in a document, whether that party has read it or accepts the risk of not doing so.
The absence of such a rule would bring chaos to everyday business transactions. Therefore parties to a signed written agreement are bound by its detailed terms. If either party chooses not to read the document prior to signature, that party takes
the risk of agreeing to terms that
are unfavourable.
* Andy Nolan is an associate
at Brodies
