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Caveat subscriptor!

Every businessperson knows the sage Roman law admonition – caveat subscriptor – which means, literally, let the signer beware.

In plainer language, this means that you should read a legal document before you sign it, because you can’t escape liability via the excuse that you signed without reading or understanding the document.

How far does the caveat subscriptor principle go? For example, are you legally bound by your signature to a document which does not itself set out all the terms, because the document says that it incorporates the provisions of another document that you have not had sight of?

This was the situation in Kuehne and Nagel (Pty) Ltd v Breathetex Corporation (Pty) Ltd, decided in the Eastern Cape High Court on 15 November 2007 (case 1921/06; not yet reported).

This case concerned a written contract which provided that K and N would act as freight forwarders for Breathetex. The agreement, signed by Breathetex, contained the following clause –

"We understand that all business is undertaken in terms of the Trading Conditions of the South African Association of Freight Forwarders, a copy of which has been left with us. We confirm that we have read and understood the contents thereof".

Despite what this clause said, a copy of the "Trading Conditions of the South African Association of Freight Forwarders" was not in fact ever provided to Breathetex.

Later, K and N sued Breathetex for R205 000 for services rendered as a freight forwarder under the agreement. Breathetex admitted liability for that amount but contended that it had a counterclaim for damages against K and N for R197 000, and therefore was only liable to pay the difference of R8 000.

K and N contended that the "Trading Conditions of the South African Association of Freight Forwarders", referred to in the signed agreement, ruled out such counterclaims.

Breathetex did not dispute this, but argued that those "Trading Conditions" did not form part of its agreement with K and N.

The crucial question to be decided by the court was therefore – did the "Trading Conditions of the South African Association of Freight Forwarders" (which were referred to in the signed agreement between K and N and Breathetex, but which Breathetex had never had sight of) form part of the agreement between K and N and Breathetex?

IT IS EASY TO SEE THE ARGUMENT AND THE COUNTER-ARGUMENT?

On the one hand, Breathetex had signed an agreement which plainly said that it incorporated the trading conditions of the Association.

On the other hand, the signed agreement also stated that Breathetex had been given a copy of the trading conditions of the Association, but K and N had not, in fact, furnished a copy of those conditions.

The latter argument was given short shrift by the court. The clause referring to the incorporation of the trading conditions of the South African Association of Freight Forwarders (said the court) had not been "surreptitiously introduced" into the document. It was in the same print as the rest of the document and "prominently placed where one could expect to find such a term". It was clear from the document itself, said the court, that K and N had taken reasonable steps to bring the terms to the attention of Breathetex.

There was no reason, said the court, to make the operation of the agreement, signed by the parties, conditional on a copy of the trading conditions of the South African Association of Freight Forwarders being given to K and N before signature.

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