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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