Signature Rule and Unconscionable Conduct in Business Law

BUSINESS LAW
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Question 2
As per the signature rule, when an individual represents his/her consent by putting the
signature on the contract, then all the provisions of this contract would be applicable on the
concerned individual irrespective of the fact whether the various provisions were read and
understood or not. Hence, in case of signed contracts, if there are certain provisions such as
exclusion clause which have an adverse impact would also be legally enforceable. A relevant
case in this regards is L'Estrange v F Graucob Ltd [1934] 2 KB 394.
In accordance with this case, there was a contract between the claimant (L'Estrange) and
defendant (Graucob) with regards to sale of a machine. The contract had an express clause
where any implied or express condition not highlighted in the contract would not be
applicable. The machine bought was found to be faulty and hence the claimant brought legal
action against the defendant owing to breach of Sale of Goods Act. The claimant highlighted
that she had not read the express clause before signing. However, the court upheld the
enforceability of the signed contract and decided in favour of the defendant since express
clause made the statutory provisions irrelevant.
There are some exceptions to the signature rule. A person is not bound by his/her signature
when there is fraud or misrepresentation. Additionally, in case the document is not a correct
representation of the agreement, then also the signature rule would be invalid. Further, in
cases where the contract has a condition precedent then the signature would be invalid if the
condition precedent is not fulfilled. Also, the signature rule is not applicable in case of non-
contractual documents. Further, in case of oral promises, even without signature contractual
relation may arise on account of promissory estoppel.