Entire agreement provisions are included in all forms of commercial contracts so as to prevent a contracting party from alleging that statements and representations made during the pre-contract stage and which were are not expressly incorporated into the written agreement constitute additional terms to the parties’ legal relationship. The decision of the Court of Appeal in the recent case of Axa Sun Life Services Plc v Campbell Martin Limited and others reiterated the judiciary’s approach to the use of entire agreement clauses in attempts to limit liability for misrepresentation.
AXA Sun Life Services Plc (“AXA”) brought a claim against Campbell Martin Limited and others (“Campbell”) for monies it claimed were due from Campbell following the termination of an agreement between the parties. The claim was disputed by the defendants who alleged that they had been induced into entering the agreement by misrepresentations and collateral warranties made by AXA pre-contract. In response, AXA alleged that the entire agreement provisions at clause 24 of the contract concluded with the defendants operated so as to exclude liability for misrepresentation. Clause 24 provided:
“This Agreement and the Schedules and documents referred to herein constitute the entire agreement and understanding between you and us in relation to the subject matter thereof. Without prejudice to any variation as provided in clause 1.1, this Agreement shall supersede any prior promises, agreements, representations, undertakings or implications whether made orally or in writing between you and us relating to the subject matter of this Agreement but this will not affect any obligations in any such prior agreement which are expressed to continue after termination.”
The High Court was initially required to determine whether the entire agreement clause prevented the defendants from relying on supposed misrepresentations made by AXA prior to the execution of the contract as to the nature of agreement to be concluded between the parties. The High Court found in favour of Campbell and held that the effect of clause 24 did not exclude liability for misrepresentation. AXA appealed.
AXA argued that the wording “…this Agreement shall supersede any prior promises, agreements, representations, undertakings or implications whether made orally or in writing…” excluded liability on its part for any misrepresentation as to the terms of the contractual relationship. After subjecting the provisions to a thorough semantic examination, the Court of Appeal disagreed. The Court concluded that whilst the clause specifically referred to “representations” it was entirely silent on the issue of “misrepresentations”. The Court went on to emphasise that for liability for misrepresentation to be effectively excluded, that intention must be stated in clear and unambiguous language and no room should be left to interpretation.
The decision of the Court of Appeal in this case is a useful reminder that an entire agreement clause will not, on its own, operate to exclude liability for misrepresentation. Parties to commercial contracts wishing to achieve this result must instead consider one of the “traditional” ways which the Court of Appeal referred to in this case, namely: the incorporation into the legal relationship of an express statement that no representations have been made, an express non-reliance statement, an express exclusion of liability for misrepresentation or a combination of the above.
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