Contracts Notes

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It is worth noting as well that signatures give certainty to third parties as well - others will rely on such as binding.

L'Estrange v Graucob [1934] 2KB 394.

'In cases in which the contract is contained in a ... unsigned document, it is necessary to prove that an alleged party was aware, or ought to have been aware of its terms and conditions. These cases have no application when the document has been signed.' Mellish LJ.

Toll (FGCT) V ALPHAPHARM

"A signature is, and is widely recognized even by the general public as being a formal device, and its value would be greatly reduced if it it could not be treated as a conclusive ground of contractual liability at least in all ordinary circumstances...the usual explanation for holding a signature to be conclusively binding is that is must be taken to show that the party signing has agreed to the contents of the document; but another possible explanation is that the other party can be treated as having relied upon the signature..." Prof. Atiyah.

1.3.1 Circumstances in which the effect of signature may be avoided

Misrepresentation and non est factum general rule

The rule in L'Estrange v Graucob will not apply where the party signing the contract has been mislead, where the plea of non-est factum would apply, or where there are equitable grounds for setting aside the contract.[9]

Misrepresentation and non est factum test

Where a term is vitiated by misrepresentation, mistake, duress, undue influence or unconscionable dealings it will not be part of the contract.[10]

non-contractual documents general rule

The rule in L'Estrange v Graucob will not apply where the document in question could not reasonably be considered a contractual document.[11]

Non-contractual documents test

A document that reasonably appears to be merely a timesheet or a receipt or a voucher will not contractually bind a person.[12]

1.5 INCORPORATION OF TERMS BY NOTICE

General rule

A trader who does not rely on a signed contract in its dealings with customers may instead attempt to incorporate the terms it wants to govern the transaction through the device of notice.[13]

General test

For delivered or displayed terms to be incorporated into a contract, the terms must be made available to the party to be bound before the contract is made.[14] That is to say, notice is required before the contract is formed.

A contracting party may incorporate its standard terms into the contract giving the other party to the contract reasonable notice of those terms before the contract is made. This is typically done either through delivering a document containing the terms or displaying a notice containing the terms.

1.5.1 The times at which the terms are available

general rule

For delivered or displayed terms to be incorporated into a contract, the terms must be made available to the party to be bound before the contract is made. [15]

general test

Only terms that have been made available to the party before a contract is made can be incorporated into the contract so as to be binding on that party.[16]

1.5.2 Knowledge or Notice

General rule

The second requirement for delivered or displayed terms to be incorporated into a contract is that the party to be bound must either have actual knowledge of the terms or have been given reasonable notice of terms.

Knowledge test

A party who actually knows that a delivered document or a sign displayed before or at the time the contract was made contains contractual terms will be bound by those terms.[17]

This will be so regardless of whether or not the party has actually read the terms. In the absence of actual knowledge, a party will be bound by delivered or displayed terms if the terms have been made available in such a form that the party to be bound can be taken to have been given reasonable notice of them.[18]

Reasonable notice of Contractual Documents test

Courts have suggested that if a document is one that a reasonable person in the circumstances would expect to contain the terms of a contract, the mere presentation of the document will be sufficient notice of the terms in the document.[19]

Reasonable notice of Non-Contractual Documents test

Where delivered or displayed terms are not contained in what is obviously a contractual document, the party seeking to incorporate the terms must take reasonable steps to bring those terms to the notice of the party to be bound.[20]

Reasonable Notice general rule

The reasonable notice required to incorporate into a contract is circumstantial according to case facts and circumstances.

The general principle is that the notice must be in such a form that it is likely to come to the attention of the party to be bound.[21]

Reference to terms not readily available general rule

In some cases a trader seeking to incorporate terms might give its customers 'notice' of terms in another document, that is not immediately or readily available to the customer. This, in accordance with the rule of reasonable notice as seen above, is insufficient.[22]

However, where there is reference to this additional document on the contractual document, and it is referred to as binding, although not readily available, the terms of this additional document are said to be binding.[23]

1.5.3 Unusual Terms general rule

Some courts have suggested that where the terms to be incorporated into a contract are unusual, special notice - such as will fairly and reasonably bring the terms to the attention of the party to be bound - must be given.[24]

Denning

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