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Dream Doors Limited v Lodgeford Homes Limited [2012]
QBD
Summary
Where a director signed a franchise agreement above the words
"as a Principal", that did not confer personal liability
on him.
Facts
This case involved a franchise agreement between, on the face of
it, Dream Doors (as franchisor) and Lodgeford Homes (as
franchisee). The franchisee had allegedly breached the terms of the
agreement which gave Dream Doors the right to terminate the
agreement and imposed certain restrictive covenants on the
franchisee. Dream Doors wanted to extend the restrictive covenants
to the director who had signed the franchise agreement on behalf of
the franchisee. He had signed the agreement above the words
"as a Principal".
Held
The High Court held that the only sensible construction was that
the director signed on the franchisee's behalf and was not
personally liable. If the agreement had been between Dream Doors
and the director, the franchisee would not have been a party, which
would mean that the agreement would have been wholly ineffective as
a matter of law for lack of consideration. The only sensible
construction was that the director had signed on the
franchisee's behalf and in those circumstances the director was
not personally a party to the agreement or bound by any of the
provisions in it.
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