When is a Signed Document Contractual ? Taking the ' Fun ' out of the ' Funfair '

This often cited dicta of Scrutton LJ in L 'Estrange v Graucob is premised on the traditional theories of freedom of contract and the objective view of contract law.2 Under these approaches the courts, primary function was perceived as being to give effect to what the parties had agreed. A party to a written agreement was taken to have consented to be bound, in a disputed case, by the interpretation which a court might place on the language of the instrument.


Introduction
\Vhen 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.1This often cited dicta of Scrutton LJ in L 'Estrange v Graucob is premised on the traditional theories of freedom of contract and the objective view of contract law.2Under these approaches the courts , primary function was perceived as being to give effect to what the parties had agreed.A party to a written agreement was taken to have consented to be bound, in a disputed case, by the interpretation which a court might place on the language of the instrument.
By and large the Jaw was concerned with objective appearance, rather than actual intention.3The primary justification given by the courts in su ;port of such an approach was the need to ensure the integrity of business transactions.Thus if a party signed a document containing contractual terms that party would be bound by the document, irrespective of whether or not it had been read.
The rule in L 'Estrange v Graucob has been subject to criticism.Lord Denning, who successfully argued the case for the defendant, subsequently wrote that L 'Estrange v Bruce Clarke Deputy Head of Studies, Swinburne University of Technology, LLM, BEe, GradDipMktg (Mon); Stephen Kapnoullas Senior Lecturer in Law, Swlnburne University of Technology, LLM, BA, DipEd (Melb).
Nevertheless, the law recognises some exceptions including non est /ttctum, misrepresentation and, in limited circumstances, mistake.In addition, the expanded doctrine of 'unconscionability' has also emerged as an exception to the rule in L 'Estrange v Graucob by recognising the undesirability of enforcing a contract (even if it has been signed) in circumstances where to do so would be manifestly unfair: see  Although the principle for which the decision stands has been said to reflect an estoppel, it is not a true example of estoppel because the party who proffers the document does not rely on the signature as an acknowledgment of the conditions and act on it to his detriment.That patty knows or has reason to know that the other party has not read mld assented to the specific conditions.Nor does the principle rest on reliance.Instead it seems to be based on the importance of a formal signature and the need to exclude an inquiry into the reality of assent.The requirements of fairness and justice may weB ca11 for its re-examination.7 One of the difficulties with L 'Estrange v Graucob is determining whether a document, or transaction, is contractual.For example, Stephen Graw, in his text.states that a document will be contractual in nature: if it is of a kind which members of the public generally regard as contractual; or if the person who receives it knows either that it is contractual or that it contains terms that govern his or her dealings with the profferens.8 The primary purpose of this article is to analyse the recent decision of the Victorian Court of Appeal in Le Mans Grand Prix Circuits Pry Ltd v lliadis (Le Mans/.The case is interesting because the court split 2-1 on whether the document, signed by the plaintiff, or the transaction that he entered into, was contractual.In so doing.the court had to consider the applicability of the rule in L "Estrange v Graucob, Le Mans Gmnd PrLt Circuits Pty Ltd v Iliad is The Facts The plaintiff was injured whilst driving a go-kart at the defendant's racetrack.The plaintiff was attending a promotional function by a local radio station, 3MP, which had booked the defendant's racetrack for a 'corporate function' night for staff members, family and friends, The plaintiff, being an invited guest, did not pay a fee for his attendance at the track.
In evidence, the plaintiff said that he was asked to "sign a particular form so that you can register your name to be able to do a lap of the go-kart race and once I did that I was qualified to drive the faster vehicle." 10 The plaintiff signed the form without reading it.
He stated that he was rushed into signing it because there were a number of people waiting and the operators of the track told him to hurry up and sign the document so that he could get out on to the !rack.
The plainriff also swore that he treated the form as a "marketing.or probably.
registration type form ... 11 Expanding on this, he said he thought that his personal details were required for the purpose of issuing him with a licence and, as well, for marketing or promotional purposes.Significantly, in tlris context, the document that the plaintiff signed commenced with the words 'TO HELP WITH OUR ADVERTISING'.12 This part of the form was in capital letters and printed in red, the rest being in black.
The plaintiffs friend, Miss Bianchi, who was an employee of He sued for breach of contract, negligence and breach of s 52 of the Trade Practices Act 1974 (Cth).However, it appears that at the trial the only claim pursued was negligence.
Apat1 from denying negligence the defendant sought to rely on an exemption clause in the document which the plaintiff had signed.The trial Judge found that the defendant had been negligent on the basis that it had allowed the plaintiff to engage in go-kart racing, an inherently dangerous pastime, without "sufficient education, instruction, experience and testing.''On the issue of the exemption clause the trial Judge had concluded: Reliance was placed on a disclaimer which was apparently signed by the plaintiff ... Le Mans Grand Prix Circuits Pty Ltd\' Jliadis, supra n 9 at 663.
The full text of the document is set out at 669 of the court's judgment.Supran 11.

The Majority Judgment in the Court of Appeal
The focus of the majority judgment.Tadgell JA (with whom Witmeke P agreed).was on whether the document signed by the plaintiff was contractual, or alternatively if the parties were in a contractual relationship.It is with this issue, rather than the interpretation of the document, that this at1icle concentrates.
Tadgell JA, after reciting the facts and background to the appeal.refetTed to the ticket cases where it was held that reasonable notice \Vas required before an exemption clause could be relied upon.16His Honour then went on to deal with the defendant's argument that signing a document denotes an acknowledgment of the document and a consent to the written contents.
After briefly examining the basis of the rule in L 'Estrange v Graucob.Tadgell JA noted that it has been subject to criticism.His Honour referred to Greig and Davis17 who argue that if the signing party has reasonable grounds tOr believing that the document is not contractual a court should not hold the party bound by its contents.The same authors suggest that the rule might also not apply in a situation where there is no practical opportunity for a party to read the document before signing.1 8 Tadgell JA also referred to the views of Mason and Gageler, as summarised in the introduction to this ar1icle, and to the criticism of the rule in L 'Estrange v Graucob by Spencer,1 9 who argues that a defence should be available to a person based on the fact "that he simply did not agree to the term in question" 20 Tadgell JA determined that it was not necessary to examine in detail the universal validity or desirability of the 'objective theory of contract' because of his finding that there was no contractual relationship between the parties in this case.2 1 "The [plaintiff's] attendance at the [defendant's] track, and his participation in go-kart racing were not obviously in pursuance or in the course of a commercial dealing or relationship with the [plaintiff]."" In support of this conclusion his Honour observed that there was no evidence that the plaintiff had paid a fee (it will be recalled that 3MP booked the racetrack).Nor were participants given any notice or indication that any contractual relationship was to exist between them and the racetrack, only a Jicence to drive.23 His Honour referred to the plaintiff's lack of opportunity to read the form, the highlighted part of the document ('TO HELP WITH OUR ADVERTISING') and the lack of explanation fi•om the defendant's employees regarding the document, and concluded: Nor is there any satisfactory evidence that the [plaintiff] or any other patticipant was asked to read the form or to treat it as anything more than a registration or application form for the purpose of obtaining a so-called licence to drive a go-kart.It might be thought that the information which the person signing was asked to provide in the form -name. address, telephone number and date of birth and date of signing -was consistent with that.It is not easy to see-at least in the absence of explanation-why a statement of the date of birth was otherwise relevant.24 In the light of tllis finding his Honour did not need to consider the interpretation of the exemption clause.In essence.his Honour found that the document which the plaintiff had signed was not contractual.bearing in mind the facts surrounding the obtaining of the plain tift's signature.

Dissenting Judgment of Batt JA
A large pati of Batt JA'sjudgment was concerned with the interpretation to be given to the signed document in this case.This aspect of the case will not be discussed in detail because� as already mentioned, this article is rimre concerned with the effect a pa1ty's signature has on a document.Batt JA found that 3MP was not an agent of the plaintiff, or any other person attending the track.However, his Honour concluded that tills did not mean that there was no contract between the plaintiff and the defendant?'In fact, he found that a contract did exist, as evidenced by the signed document [refened to as Ex.I]: The circumstances referred to earlier show, in my judgment, that the   Furthermore.the signing of the documents took place after the contracts had been concluded.
The plaintiff also argued that no contract existed between him and the defendant on the ground that the defendant had failed to perfmm all of the acts expressed as constituting consideration in the document he had signed, in particular.the failure to 'hire' the 'go kart' to him.Clearly the 'hire' was to 3MP.His Honour dismissed this argument on the grounds that the 'hire' to 3MP for delivery to its staff and their friends for their use constituted consideration.31Batt JA then proceeded to deal with the exceptions to the rule in L '&trange 1' Gmucub and found that there was no evidence of fraud or misrepresentation by the defendant.
His Honour also noted the academic and judicial criticism of the rule in L 'Estrange 1' Graucob but concluded that Mason and Gageler had simply stated that the requirements of fairness and justice may well cal1 for re-examination of the principle.He observed that Dr. Finn (as he then was) in the same text32 appeared to accept the correctness of the statement of Scrutton U. Batt JA also referred to the judgments of Dawson J in Taylor v Johnson33 and Brellllan J in Oceanic Sun Line Special Shipping Co. Inc. v Fa;l' as accepting the principle espoused in L 'Estrange v Gtaucob.Clearly, Batt JA suppm1s the retention of the rule.
The plaintiff also attempted to argue that where a clause is onerous or unusual then actual notice is required.Reference was made to lntelfoto Picture LibrmJI Ltd. v Stiletto Visual Programme Ltd.35 Batt JA distinguished that case on the basis that the delivery note was unsigned, whereas here "signing affords the person who signs the opportunity to become aware of the contents of the document."36 Finally, Batt JA dealt with the interpretation of the exemption clause and concluded: ... I do not consider that Darlington Futures and other decisions of the High Court, at any rate� warrant some different approach, perhaps relying upon the now rejected doctrine of fundamental breach, in the case of a contract with a consumer or other non-commercial contract.For the rationale in the Australian cases is that exemption clauses in commercial contracts are to have applied to them ordinary principles of construction, admittedly with clear regard being paid to their context and their nature and object.37 with Thompson v London, lvlidland and Scottish Railway Co.:\ represented a 1bleak winter' for the law of contract.6 The former Chief Justice of the High Court, Sir Anthony Mason, in a joint article with S J Gageler, has commented: made by his Honour, at 666, to Causer v Browne [1952] VR I. D \V Greig & J L R Davis, The Law of Contract.Law Book Co Sydney 1987 at 605.Ibid at 611.J R Spencer, 'Signature, Consent and the Rule in L 'Esmmge v Graucob' [19731 CU 104, Ibid at 105.Supra n 11 at 667.Ibid.Ibid at 668.

[
plaintiffs] completion and signature of Ex.I was the price or quid pro quo for the [defendant's] consent, licence and permission ... which he needed.The known circumstances attending the signing of Ex.l, then, are eloquent of contract.That Ex.! is contractual is confirmed by its layout and by the expressions used in it.The body of the document commences with a contractual expression par excellence, 'in consideration of.Thereafter every clause, perhaps every line, contains legal terms of art, which I do not trouble to rehearse here.Therefore, in the absence of evid�nce proving the existence of a more extensive contract between the [plaintiff] and[defendant].Ex.l constitutes, in my view, a uniJateral contract, that is, promises by the [plaintiff] made binding by the [defendant's] act or acts of consent, licence and pem1ission occurring aft er the signing of Ex.l ?6The plaintiff's evidence concerning his interpretation of the document was rejected by Batt JA as inadmissible opinion evidence.27With reference to the top of the form, which stated 'TO HELP WITH OUR ADVERTISING', his Honour was of the view that many retail documents seek similar information without detracting from the contractual nature of the document.28at 670.Ibid at 671.
Batt JA distinguished D. J. Hill & Co. Pty.Ltd. v Walter H Wright Pty.Ltd.29 and Rinaldi & Patron/ Pty. Ltd. v Precision Mouldings Pty.Ltd.30 on the basis that the documents in those cases (delivery dockets and cart notes) were not contractual.
3MP, gave similar evidence.She confinned being rushed into signing the document.When asked what the form was for, she replied, "I guess� we were there as a group, and it was organised by 3MP who I work for.Everyone in the group signed a form to get our licences.You have to get a licence before you can drive:• JJ The plaintiffs vehicle overturned because of what he alleged was a defect in the track.
The defendant appealed.The principal issues for determination by the court were whether the exemption clause formed part of the contract, and if it did, the interpretation of the document.It should be noted that neither party to the appeal sought to uphold the trial Judge's view that it has never been permissible to sign away liability for serious negligence.With respect, there is no doubt that the trial Judge was incorrect in stating this opinion, as it clearly conflicts with what the High Court said in Darlington Futures Ltd v Delco Australia Pty Ltd.15 The disclaimer itself is in such broad terms that I quite frankly do not understand unless it purports to be a blanket disposal of any legal responsibility at all, what it actually does mean.I am well aware in what the High Court has said in the Darlington Futures case .. .neverthelessI do not believe that our law ever has been that it is permissible to sign away all responsibility for mishaps whlch are foreseeable so that a person can be indemnified or exonerated if you wish from liability for a serious negligence.Hu " " u 15 1971] VR 749.[1986] WAR Ill.Supra n II at 672.Supra n 3 at l33. (1983) !51 CLR422.(1988) 165 CLR 197 at 228. [1989] QB 433.Supra n II at 674.