What is the test for a party to be liable under a written agreement?

One must begin from the proposition set out in L’Estrange v. Graucob, supra, at pp. 406-407, that “where a party has signed a written agreement it is immaterial to the question of his liability under it that he has not read it and does not know its contents”. Maugham L.J. went on to state two exceptions to this rule. The first is where the document is signed by the plaintiff “in circumstances which made it not her act” (non est factum). The second is where the agreement has been induced by fraud or misrepresentation.

To these exceptions a third has been added. Where the party seeking to enforce the document knew or had reason to know of the other’s mistake as to its terms, those terms should not be enforced: Waddams, The Law of Contracts, quoted with approval in Tilden Rent-A-Car v. Clendenning, supra, per Dubin J.A. at p. 605. This new exception is entirely in the spirit of the two recognized in 1934 in L’Estrange v. Graucob, supra. Where a party has reason to believe that the signing party is mistaken as to a term, then the signing party cannot reasonably have been taken to have consented to that term, with the result that the signature which purportedly binds him to it is not his consensual act. Similarly, to allow someone to sign a document where one has reason to believe he is mistaken as to its contents, is not far distant from active misrepresentation.