Contract enforceable despite signature inconsistency
Own name signature without qualification as to capacity makes contract signatory a party.
The case of Gregor Fisken Limited v Bernard Carl, which was the subject of a judgment by the Court of Appeal at the end of May 2021, serves as a warning about taking care over the signing of contracts and in ensuring that the contract itself is clear, on a general level.
The contract in question was for the sale of a Ferrari 250 GTO coupe, belonging to Mr Carl, a Florida based collector of classic cars, for $44million. The contract described the buyer, Gregor Fisken Limited (GFL), a classic car dealership, as “agent for an undisclosed principal” but its signature wasn’t qualified in any way and in particular it did not state that the contract was signed in its capacity as agent.
It seems that Mr Carl and GFL had done business with one another before, mostly in circumstances where GFL had acted as a broker but on one occasion, Mr Carl had sold a vehicle to GFL itself as principal.
There was, in fact, no undisclosed principal. GFL was acting on its own behalf, with a view to later reselling the GTO at a profit. The Court accepted that it was more likely than not that Mr Carl actually believed that GFL was acting as agent for someone else and that GFL knew this to be Mr Carl’s thinking.
The vehicle’s gearbox was in the possession of a third party. The contract stated that Mr Carl would use his best efforts to recover and deliver the gearbox and that if he could do so, he would do so promptly without additional compensation. A disagreement erupted over the cost of a shipment of the gearbox to Italy for inspection, with Mr Carl contending that the buyer should accept delivery of the gearbox in California, to where the gearbox had been traced. This disagreement culminated in Mr Carl arguing that the buyer had repudiated the contract, releasing him from the obligation to deliver the gearbox. At trial, the judge disagreed and made an order that Mr Carl should deliver the gearbox.
At the appeal hearing, Mr Carl argued that the buyer, GFL, couldn’t enforce the contract because it wasn’t a party to the contract. He relied on the wording in the heading of the contract that described it as agent for an undisclosed principal. The Court of Appeal recognised the inconsistency but rejected Mr Carl’s argument, upholding the trial judge’s decision that the way in which the contract was signed prevailed over the description in the heading of the contract. In this context, according to previous and long-established case law, the person who signed is taken to be the contracting party unless the document makes clear that he signed as agent of a sufficiently identified principal or as the officer of a sufficiently identified company or extrinsic evidence establishes that both parties knew he was signing as agent or company officer.
Although GFL was described as an agent in the body of the Agreement, the description in the body of the Agreement did not trump the role assigned to the buyer in its signature (which made no reference to the buyer signing as agent).
Ultimately, the Court said, it was necessary to have some principle of construction to resolve the inconsistency where a person signs a contract as a contracting party without qualification but is described in the body of the contract as an agent. If the contract contains no other means of resolving that inconsistency, English law has decided that the signature is the predominating consideration and has maintained that position over the last 150 years or so. It is too late to change that now without introducing considerable uncertainty into the law of contract.
Disclaimer: this article is not to be relied upon as legal advice. The circumstances of each case differ and legal advice specific to the individual case should always be sought.