Legal effect of a signature

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A signature has the legal effect of signifying that a party has read, understood and assents to the contract.[1] A party who has signed a contract will be bound by its terms regardless of whether it read it or not.[2] However, there are several instances in which a signature will not prove binding:

  1. When the signature has been obtained unfairly.
  2. When the document being signed cannot reasonably be considered a contractual document.
    • For example, because it appears to have another function such as being a receipt.[4]
  3. When the conditions are unusual or onerous and there was no reasonable notice.[5]

If one of these requirements is satisfied, a party would not be bound to a contract because of its signature. the contract would be void ab initio.

This article is a topic within the subject Contracts.

Contents

Required Reading

Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 350-360 [12.65-12.90].

Introduction

[6] The general rule set in L’Estrange v F Graucob Ltd that a party is bound by the terms contained in a contractual document which he signed, regardless of whether he has read it[7]:

  • Signing the document means a party is legally bound, because it represents the party's examination and agreement to the document.
  • "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.[8]"

This was also reaffirmed in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd:

  • Subject to exceptions listed below, a signature has a legal effect of reading and accepting the contract, regardless of whether the party actually did so.
  • The signature also releases the Offeree from having to give 'reasonable notice' of terms and conditions. Requiring to sign on terms clearly displayed is giving the 'maximum' notice.

Circumstances in which the effect of a signature may be avoided

[9] The rule set above will not apply in cases where:

These issues were detailed in Curtis v Chemical Cleaning & Dyeing Co:

  • The general rule to the effect of a signature is that "if the party affected signs a written document known to be a contract which governs the relations between them, then his signature is irrefragable evidence of his assent to the whole contract, including the exempting clauses, unless the signature is shown to be obtained by fraud or misrepresentation.[10]
  • This means that a signature will not be binding where the signature was obtained by a misrepresentation, or where the document was know known to be a contract by the party signing it.

References

Casebook refers to Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009).

Textbook refers to Paterson, Robertson & Duke, Principles of Contract Law (Lawbook Co, 3rd ed, 2009).

ACL refers to the Australian Consumer Law.

  1. L’Estrange v F Graucob Ltd [1934] 2 KB 394
  2. L’Estrange v F Graucob Ltd [1934] 2 KB 394, 403
  3. Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805, 808
  4. Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805, 808. See also Mistake - mistakenly signed documents.
  5. Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163, 169
  6. Textbook, p. 233 [2.70]
  7. See Acceptance
  8. [1934] 2 KB 394, 403
  9. Casebook, p. 360 [12.85], Textbook, pp. 233-4 [12.75]
  10. [1951] 1 KB 805, 808, relying on L’Estrange v F Graucob Ltd [1934] 2 KB 394"
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