Beware the risk of signing a contract without reading it first

What is the potential legal risk in signing a contract without having obtained or accessed, let alone having read, a copy of its terms?

The general approach

The High Court has held that the act of signature (or other form of execution) is what makes legal documents meaningful; such an act signals a party’s commitment to the terms of a contract; it ‘enables third parties to assume the legal efficacy of the instrument’ and ‘[t]o undermine that assumption would cause serious mischief’.[1]

That said, the law recognises limited instances in which a party can avoid the consequences of having signed a contractual document. The general proposition can be found in the pronouncement of Lord Scrutton in L’Estrange v F Graucob Ltd:

‘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’.[2]

What if the terms of a contract were never supplied (let alone read)?

In Mukerji v Commonwealth Bank of Australia,[3] guarantors for a loan sought to overturn a first-instance decision where they were found to have been bound to the terms of a guarantee even though they had never been supplied with a copy of its terms. The Court dismissed their appeal, stating that on the prevailing case law:

‘[I]t is sufficient for a party to be legally bound if a party intends to sign a document and enter into legal relations. Further that they will be bound to the terms of that contract even if they are not aware of those terms, whether it is because of their failure to read the terms or conditions or failure to obtain them beforehand. That is a matter which is determined objectively.’[4]

In this case, objectively speaking, the guarantors had signed a document fashioned as a guarantee and they had signed it ‘in the context of [them] knowing that they were financial documents relevant to securing [borrowed] monies’. The requisite indicia were there. It did not matter that, subjectively, the guarantors did not know the details or terms to which they were assenting; they ‘were in no different position from a party who has the terms and conditions before them but does not read them’.[5]

The Court of Appeal went on to say:

‘This case serves as a reminder that a person should pause for thought and make proper inquiries as to the legal document that they are proposing to sign rather than proceeding to sign the documents and taking the chance by being bound by its contents.’[6]

[1]: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 182 [47].

[2]: [1934] 2 KB 394, 403.

[3]: [2025] QCA 226.

[4]: Ibid [62].

[5]: Ibid [38].

[6]: Ibid [66].