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Signature, Consent, and the Rule in L'Estrange v. Graucob

Published online by Cambridge University Press:  16 January 2009

J. R. Spencer
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Extract

It seems to be generally accepted that a person who signs a contractual document may not dispute his agreement to any of the terms which it contains, unless he can establish one of three defences: (a) fraud, (b) misrepresentation, or (c) non est factum.

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The Cambridge Law Journal , Volume 32 , Issue 1 , April 1973 , pp. 104 - 122
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Copyright © Cambridge Law Journal and Contributors 1973

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References

1 Sutton and Shannon on Contracts, 7th ed., p. 106; Cheshire and Fifoot, The Law of Contract, 8th ed., p. 129; Salmond and Williams on Contracts, p. 79.

2 It was a decision of the Divisional Court, with Scrutton and Maugham L.JJ. sitting as additional judges in the King's Bench Division. It is often mistaken for a decision of the Court of Appeal, e.g., McCutcheon v. MacBrayne [1964] 1 W.L.R. 125 at p. 134Google Scholar, per Lord Devlin, quoted post, p. 117. This has probably given the case a weight of authority it does not really possess.

3 [1934] 2 K.B. 394.

4 Ibid. at p. 403.

5 Ibid. at p. 406.

6 [1930] 1 K.B. 628.

7 [1920] P. 22.

8 (1877) 2 C.P.D. 416 at p. 421. The court also referred to Roe v. Naylor (No. 2) (1918) 87 L.J.K.B. 958Google Scholar, which contains similar dicta. See 87 L.J.K.B. 958 at p. 964, per Scrutton L.J.

9 It was described as “a menace to the community” by P. A. Landon in his note on the case, 51 L.Q.R. 272. The author is indebted to this case-note.

10 The Supply of Goods (Implied Terms) Bill will greatly reduce the effect of L'Estrange v. Graucob as regards contracts for the sale and supply of goods, although the general problem of onerous terms in signed contracts, especially those in standard form, will still remain.

11 (1871) L.R. 6 Q.B. 597.

12 The Law of Contract, 8th ed., pp. 202–203.

13 Slade, “The Myth of Mistake in the English Law of Contract,” 70 L.Q.R. 385; Atiyah, Introduction to the Law of Contract, 2nd ed., p. 49.

14 (1848) 2 Ex. 654; 154 E.R. 652. Freeman v. Cooke has nothing to do with contract. The court, however, expounded estoppel in general terms, and this exposition was picked up and applied to a contract case, first in Cornish v. Abington (1859) 4 H. & N. 549; 157 E.R. 956, and again in Smith v. Hughes.

15 (1871) L.R. 6 Q.B. 597 at p. 607.

16 Cf. Gill v. McDowell [1903] 2 I.R.K.B. 463Google Scholar, where a hermaphrodite was mistaken for either a bullock or a heifer, it is not clear which, and Thwaites v. Morrison (1918) 14 Alta.Rep. 8Google Scholar, where a stallion was mistaken for a gelding. If nothing else, these two cases show that no imaginary example can ever be more improbable than one from real life.

17 Singleton J.'s judgment inHartog v. Colin and Shields, infra, appears to cover both the cases where B had actual knowledge of A's mistake and the case where he had constructive knowledge only. He said: “The plaintiff could not reason-ably have supposed that the offer contained the offeror's real intention.”

18 Smith v. Hughes(1871) L.R. 6 Q.B. 597 at p. 610, per Hannen J.; Gill v. McDowell, supra; London Holeproof Hosiery v. Padmore (1928) 44 T.L.R. 499Google Scholar; Hitchman v. Avery (1892) 8 T.L.R. 698 (discussed post, p. 121); cf. Ewing & Lawson v. Hanbury & Co. (1900) 16 T.L.R. 140.Google Scholar

19 As in Gill v. McDowell, supra, where the court found that A intended to buy either B's heifer or his bullock (it is not clear which), that B intended to sell his hermaphrodite, and that B well knew A to be mistaken as to what he was buying. The court therefore held the contract to be void. On the facts as found, the decision is undoubtedly correct. One wonders, however, whether the facts were not really as found, but rather that A was buying a specific animal, wholly indifferent as to its sex, if any. Had these facts been found, there ought to have been a valid contract, because the parties would then have been perfectly ad idem.

20 [1939] 3 All E.R. 566.

21 In Gill v. McDowell, supra, the seller put the animal, itself “a sort of living lie” [1903] 2 I.R.K.B. 463 at p. 469, per Gibson J., among other animals which were either bullocks or heifers, so that its peculiarity was concealed. Cf. Roe v. Naylor (No. 1) [1917] 1 K.B. 712. For a case in equity, see Torrance v. Bolton (1872) 8 Ch.App. 118.

22 [1913] 3 K.B. 564. The case has suffered bad mangling at the hands of those who wish to make it fit their theory. In Principles of the Law of Contracts, by Salmond and Winfield, p. 179, it was wrongly explained as turning on the fact that the auctioneer knew the purchaser was mistaken (which he did not). This was corrected when the book re-emerged as Salmond and Williams on Contracts (p. 209). Cheshire and Fifoot explain the decision as one where “the evidence is so conflicting that there is nothing sufficiently solid from which to infer a contract in any final form without indulging in mere speculation,” so that the court must “of necessity declare that no contract whatsoever has been created” (8th ed., p. 222). This, with respect, is also misleading.

23 Treitel, The Law of Contract, 3rd ed., p. 1; Salmond and Williams on Contract, Chap. V; Smith and Thomas, A Casebook on Contract, 4th ed., pp. 3–4; Slade, op. cit., 70 L.Q.R. 385.

24 Ante. p. 106.

25 In Solle v. Butcher, infra, Denning L.J. said that nowadays the contract in Smith v. Hughes would be held voidable only, and likewise the contract in Cundy v. Lindsay (1876) 1 Q.B.D. 348; (1877) 2 Q.B.D. 96; (1878) 3 App.Cas. 459. Sed quaere.

26 Slade, “The Myth of Mistake in the English Law of Contract,” 70 L.Q.R. 385, 390, 396. Torrance v. Bolton (1872) 2 Ch.App. 118 lends some support to this view. The court rescinded a contract which a man had made at an auction because he mistook what he was buying, the mistake being partly the fault of the vendor who had prepared misleading particulars of sale—the facts being very similar to Scriven v. Hindley. But the fact that a court of equity granted rescission does not exclude the possibility that the contract would, like Scriven v. Hindley, have been void at common law: Cooper v. Phibbs (1867) L.R. 2 H.L. 149 appears to be a case in which the courts of equity “rescinded” a contract void at common law.

27 Solle v. Butcher, infra. Denning L.J. approved his own views there expressed in Leaf v. International Galleries [1950] 2 K.B. 86, 89Google Scholar, and applied them in Rose (Frederick E.) (London) Ltd. v. Pim (Wm. H.) Junior & Co. Ltd. [1953] 2 Q.B. 450, 460.Google Scholar See also Gallie v. Lee [1969]Google Scholar 2 Ch. 17, 33 (affirmed sub nom. Sounders v. Anglia Building Society [1971]Google Scholar A.C. 1004), and Lewis v. Averay [1972] 1 Q.B. 198.Google Scholar

28 [1950] 1 K.B. 671 at p. 691.

29 Author's italics.

30 [1932] A.C. 161.

31 Anson's Law of Contract, 23rd ed., p. 261.

32 Williston on Contracts, ss. 1536, 1537. Williston, “Mutual Assent in the Formation of Contracts” (1919) 14 Illinois Law Review, p. 85, reprinted in Selected Readings on the Law of Contracts (New York), p. 119. Williston's views are not universally accepted in the U.S.A. See Corbin on Contracts, s. 106, where they are strongly refuted, and Rickett v. Pennsylvania Railroad Co., 153 F. 2d 757. Williston himself admitted that his theory did not square with English cases so well as with those from his own country—see his article, supra, at p. 120.

33 ss. 70 and 71, especially 71 (c), Illustration (2). But the theory set out in the Restatement is not so extreme as that of Lord Denning, since it accepts that no contract is concluded in a case like Hartog v. Colin and Shields—see s. 71 (c).

34 [1950] 1 K.B. 671 at p. 693.

35 Pope & Pearson v. Buenos Aires New Gas Co. (1892) 8 T.L.R. 758.

36 London Holeproof Hosiery v. Padmore (1928)Google Scholar 44 T.L.R. 499; Sullivan v. Constable (1932) 48 T.L.R. 369Google Scholar; Ewing & Lawson v. Hanbury & Co. (1900) 16 T.L.R. 140Google Scholar; Hitchman v. Avery (1892) 8 T.L.R. 698. See also the following cases, which were decided on the Smith v. Hughes theory of agreement, but without reference to the case itself: Cornish v. Abington (1859) 4 H. & N. 549; 157 E.R. 956; Harris v. Great Western Railway (1876) 1 Q.B.D. 515 and Tamplin v. James (1880) 15 Ch.D. 215.

37 Riley v. Spottswood (1873) 23 U.C.C.P. 318; Lindsay v. Heron (1921) 50 O.L.R. 1Google Scholar; Colonial Investment Co. of Winnipeg v. Borland (1911) 1 W.W.R. 171Google Scholar; (1912) 2 W.W.R. 960. Cf. Hobbs v. Esquimalt and Nanaimo Ry. (1899) 29 S.C.R. 450.

38 Goldsborough Mort & Co. v. Quinn (1910) 10 C.L.R. 674, 695Google Scholar; Cheshire and Fifoot, The Law of Contract, 2nd Australian edition, p. 333.

39 London Holeproof Hosiery v. Padmore (1928) 44 T.L.R. 499Google Scholar; Gill v. McDowell [1903] 2 I.R.K.B. 463Google Scholar; Hitchman v. Avery (1892) 8 T.L.R. 698; cf. Ewing & Lawson v. Hanbury & Co. (1900) 16 T.L.R. 140.Google Scholar

40 (1876) 1 Q.B.D. 348; (1877) 2 Q.B.D. 96; (1878) 3 App.Cas. 459.

41 Leaf v. International Galleries [1950] 2 K.B. 86Google Scholar; Rose v. Pim [1953] 2 Q.B. 450Google Scholar; Gallie v. Lee [1969] 2 Ch. 17Google Scholar (affirmed sub nom. Sounders v. Anglia Building Society [1971]Google Scholar A.C. 1004); Lewis v. Averay [1972] 1 Q.B. 198.Google Scholar

42 In Solle v. Butcher there was no dispute as to what the parties had agreed—the question was whether the court could relieve P on account of a mistake of fact which was shared by both parties. Leaf v. International Galleries turned on rescission for misrepresentation, and everything that is said about agreement is clearly obiter. Gallie v. Lee is a non est factum case pure and simple, and was so treated by the House of Lords when it affirmed the decision sub nom. Saunders v. Anglia Building Society [1971]Google Scholar A.C. 1004. In Lewis v. Averay the other members of the Court of Appeal held that there had been a mistake of attributes, not of identity, and assumed that the contract would have been void had there been a mistake of identity, however the transaction would have appeared to the “reasonable fly on the wall.”

43 [1953] 2 Q.B. 450.

44 Post, n. 56.

45 [1942] 1 All E.R. 220.

46 See Stoljar, Quasi-Contract, p. 186; Wade, Restitution, Cases and Materials (U.S.A.), 2nd ed., p. 108. Although Anson's Law of Contract, 23rd ed., pp. 30, 280, goes into the case, neither Treitel nor Cheshire and Fifoot think it is worth attention.

47 Lindsay v. Heron (1921) 50 O.L.R. 1.Google Scholar

48 Raffles v. Wichelhaus (1864) 2 H. & C. 906; 159 E.R. 375.

49 Falck v. Williams [1900]Google Scholar A.C. 176.

50 Streimer v. Nagel (1909) 11 W.L.R. 325 (Man.).Google Scholar

51 Free Ukranian etc. Credit Union v. Hnatkiw (1961) 44 D.L.R. (2d) 633 (Ont.).Google Scholar

52 Freeman v. Kaltio (1963) 39 D.L.R. (2d) 496 (B.C.).Google Scholar

53 Lord Bramwell, quoted in Winfield and Jolowicz on Tort, 9th ed., p. 26, n. 24.

54 A. P. Herbert, Uncommon Law.

55 Cf. Restatement—Contracts, s. 71 (c), illustration (2). “A says to B, ‘I offer to sell you my horse for $100.’ B, knowing that A intends to offer to sell his cow, not his horse for that price, and that the use of the word ‘horse’ is a slip of the tongue, replies ‘I accept.’ There is no contract for the sale of either the horse or the cow.” Sed quaere. If neither party has misunderstood the other, surely the answer ought to be that there is a contract for the sale of the cow.

56 [1953] 2 Q.B. 450. The decisions of the other members of the Court of Appeal seem to be based rather on the assumption that feveroles are simply a special kind of horsebean, that there was no dispute as to what the parties agreed to buy and sell, but simply a mistake of both parties as to the qualities of what they agreed to buy and sell. So the case was one where the parties had reached agreement, but under a common mistake which did not go to the root of the transaction.

57 See Glanville Williams, 23 Can. Bar Rev. 380 at p. 387, and also 17 M.L.R. 154. See also Slade, 70 L.Q.R. 385, 396, n. 50.

58 [1934] 2 K.B. 394.

59 (1871) L.R. 6 Q.B. 597 at p. 607, per Blackburn J.

60 [1934] 2 K.B. 394 at p. 407.

61 [1913] 3 K.B. 564.

62 [1951] 1 K.B. 805; Jaques v. Lloyd [1968] 1 W.L.R. 625.Google Scholar

63 As the defendant was allowed to do in the analogous Canadian case, Colonial Investment Co. of Winnipeg v. Borland (1911) 1 W.W.R. 171Google Scholar; (1912) 2 W.W.R. 960, and in the American case, International Transportation Assn. v. Atlantic Canning Co. (1933) 249 N.W. 240, discussed post, pp. 121–2.Google Scholar

64 It could be that neither of these arguments were raised, of course. We know that counsel tried unsuccessfully to prove a misrepresentation about the legal nature of the document, but little else about how he put his case. Alternatively, the court may have seen any such argument as amounting to a charge of fraud against Graucob Ltd., which in the circumstances could not be raised. See [1934] 2 K.B. 394 at p. 403, per Scrutton L.J. See also n. 67, post.

65 [1930] 1 K.B. 628.

66 In this case, the court did not even mention the possibility of a defence of innocent misrepresentation, which was later allowed in L'Estrange v. Graucob. In Blay v. Pollard and Morris a claim for rectification of the document, based on the allegation that it failed to give effect to the prior agreement of both parties, was also made. This failed, because Morris could not prove the document to have been signed under a common mistake.

67 A further reason why both parties failed is that Scrutton L.J. apparently saw a defence based on Smith v. Hughes as amounting to an allegation of fraud, which could be made in neither case, because it should have been (and had not been) raised expressly in the pleadings; see [1930] 1 K.B. 628 at pp. 633–634; [1934] 2 K.B. 394 at p. 403. Sed quaere. To say that the parties did not agree is not the same as to say that one cheated the other. There is no suggestion that a defence of no consensus amounts to fraud in Smith v. Hughes itself, nor in the Court of Appeal decision in London Holeproof Hosiery v. Padmore (1928) 44 T.L.R. 499.Google Scholar

68 It is clear from the context that the author is not talking about deeds alone, but is referring to all kinds of signed instrument.

69 7th ed., p. 448.

70 Author's italics.

71 [1964] 1 W.L.R. 125 at p. 134.

72 Roe v. Naylor (No. 2) (1918) 87 L.J.K.B. 958 at p. 964.Google Scholar

73 [1934] 2 K.B. 394.

74 The Court of Appeal in Blay v. Pollard and Morris [1930] 1 K.B. 628Google Scholar and the Court of Appeal in Roe v. Naylor (No. 2) had a common factor in the person of Scrutton L.J. So the court in Blay v. Pollard and Morris probably had the parol evidence rule in mind, too. It is also worth noticing that L'Estrange v. Graucob was cited with approval in a leading parol evidence rule case, Hutton v. Watling [1948] Ch. 398.Google Scholar

75 p. 147, relying on Goss v. Nugent (1833) 5 B. & Ad. 58; 110 E.R. 713.

76 (1871) L.R. 6 Q.B. 597.

77 Quoting Paley, Moral Philosophy.

78 Chitty's Law of Contracts (1834) (later Chitty on Contracts), p. 63.

79 Wedderburn [1959] C.L.J. 58, 62.

80 Ibid. p. 63.

81 See authority collected in Treitel, 3rd ed., p. 152 et seq.

82 [1959] Ch. 129. Cf. Couchman v. Hill [1947]Google Scholar K.B. 554; Curtis v. Chemical Cleaning and Dyeing [1951]Google Scholar K.B. 805; and Jaques v. Lloyd [1968] 1 W.L.R. 625.Google Scholar

83 Salmond and Williams, p. 162; Treitel, 3rd ed., p. 152.

84 When the two cases under discussion were decided, the rules of non est factum were substantially different from those obtaining today. In 1934, a defence of non est factum was only available to someone who had signed a document under a mistake about the class of document in question; a mistake about its contents, however serious, would not do; Howatson v. Webb [1907] 1 Ch. 537Google Scholar; [1908] 1 Ch. 1. Neither Miss L'Estrange nor Morris could have raised the defence because each understood the class of document they had signed, and both had made a mistake about its contents only. In 1971, the House of Lords gave non est factum a face-lift. In Sounders v. Anglia Building Society [1971]Google Scholar A.C. 1004, the House of Lords virtually overruled Howatson v. Webb, holding that in future, any really serious mistake about the document signed could give rise to non est factum, whether it was a mistake as to class or as to contents. However, neither Miss L'Estrange nor Morris would be in any better position under the new version of non est factum than they were under the old. The House of Lords stressed that the mistake must still be such as to make the transaction radically different from what the signatory imagined, and to judge from the examples their Lordships gave, the mistakes which Miss L'Estrange and Morris made would be wholly insufficient to raise a defence of non est factum even today. In fact, both persons would probably be worse off under the new rule than they were under the old. Formerly, it was irrelevant that the signatory had been careless in not reading the document— Carlisle & Cumberland Banking Co. v. Bragg [1911] 1 K.B. 489.Google Scholar But the House of Lords overruled Bragg's case and held that carelessness of this kind precludes the defence altogether.

85 Restatement—Contracts, s. 500; Williston on Contracts, s. 1535.

86 See Landon, 51 L.Q.R. 272 at p. 274.

87 (1869) L.R. 4 C.P. 704.

88 Hunter v. Walters (1871) L.R. 7 Ch.App. 75; Lewis v. Clay (1897) 67 L.J.K.B. 224; National Provincial Bank v. Jackson (1886) 33 Ch.D. 1: Howatson v. Webb [1907] 1 Ch. 537Google Scholar; [1908] 1 Ch. 1; Bagot v. Chapman [1907] 2 Ch. 222Google Scholar; Carlisle & Cumberland Banking Co. v. Bragg [1911] 1 K.B. 489Google Scholar; Mercantile Credit v. Hamblin [1965] 2 Q.B. 242Google Scholar; Muskham Finance v. Howard [1963] 1 Q.B. 904Google Scholar; Sounders v. Anglia Building Society [1971]Google Scholar A.C. 1004.

89 A further exception is the decision of the Privy Council in Hasham v. Zenab [1960]Google Scholar A.C. 316, where despite counsel's submission that mistake and non est factum overlap [1960]Google Scholar A.C. 316 at p. 329, the court appeared to think they did not. However, the decision is not binding in England, being a decision on the interpretation of the Indian Contracts Act in force in East Africa.

90 (1876) 1 Q.B.D. 348; (1877) 2 Q.B.D. 96; (1878) 3 App.Cas. 459.

91 Cheshire and Fifoot, 8th ed., p. 236; Sounders v. Anglia Building Society [1971] A.C. 1004 at p. 1024Google Scholar, per Lord Wilberforce.

92 [1934] 2 K.B. 394.

93 [1930] 1 K.B. 628.

94 (1892) 8 T.L.R. 698. This case must go some way to counterbalance The Luna [1920] P. 22Google Scholar, another decision at first instance, which goes the other way. See also Roe v. Naylor (No. 1) [1917]Google Scholar 1 K.B. 712, where at p. 716 Atkin J. said “If a party signs the document he is taken to have assented to the terms contained in it. If although he has not signed the document, he has received it without dissent, he would also prima facie be taken to have assented to the terms. But in both cases the issue might arise whether a particular clause was one of the terms so assented to. In that case the question would be, was the document in such a form that a reasonable man reading the document with reasonable care might and did fail to see that the particular clause in question formed part of the contractual terms?” See also Alan v. Mawson (1814) 4 Camp. 115; 171 E.R. 37, and the case referred to by Lord Hardwicke in 2 Atk. 32; 26 E.R. 416. None of this authority was cited in L'Estrange v. Graucob or in Blay v. Pollard and Morris.

95 (1911) 1 W.W.R. 171. Affirmed (1912) 2 W.W.R. 960.

96 (1871) L.R. 6 Q.B. 597.

97 Cf. an American decision, International Transportation Association v. Atlantic Canning Co. (1933) 249 N.W. 240Google Scholar, and two further Canadian decisions, International Transportation Association v. Winnipeg Storage Ltd. [1931] 2 W.W.R. 664Google Scholar (Manitoba), and International Transportation Association v. Capital Storage [1928] 4 D.L.R. 480Google Scholar (Saskatchewan). P sent D a document requesting information about his business for a trade directory. Among a mass of clauses was hidden one whereby D promised to pay P $100 for the privilege. On these facts, D was allowed to deny his consent to a contract.

98 When the courts rule out a particular line of defence altogether lest liars abuse it, the results are usually too harsh, because by so doing they prevent an honest man from telling an unlikely tale on the rare occasion when it happens to be true. Cf. the “objective” test of mens rea established in D.P.P. v. Smith [1961]Google Scholar A.C. 290, reversed after public outcry by the Criminal Justice Act 1967, s. 8.

99 Blay v. Pollard and Morris [1930] 1 K.B. 628 at p. 633Google Scholar, per Scrutton L.J.