The High Court has held that an entire agreement clause in a commercial contract had the effect of excluding liability for misrepresentation under section 2(1) of the Misrepresentation Act 1967: NF Football Investments Limited v NFFC Group Holdings Limited [2018] EWHC 1346 (Ch).

This contrasts with the orthodox view that the effect of an entire agreement statement is merely to avoid pre-contractual representations becoming terms of the contract, and that such a statement will not, in itself, exclude liability for misrepresentation (as noted for example in our contract disputes practical guide on pre-contractual statements).

The decision notes that clauses which effectively exclude liability for misrepresentation will ordinarily be expressed using well-established formulations, such as non-reliance wording (see our post earlier on a recent Court of Appeal decision which considered a non-reliance clause) or an express statement that liability is excluded. However, it emphasises that an entire agreement clause (like any other) must be construed in its contractual context. To put it another way, there are no magic words that must be used.

As a practical matter, to avoid any dispute, parties seeking to exclude liability for misrepresentation would be well advised to stick to the well-established formulations – not least as this is a decision of a Master, and there is no guarantee that the same approach will be taken in other cases. It shows, however, that a departure from those formulations need not always be fatal. Continue reading →

The Court of Appeal has found that a “non-reliance” clause in a lease was a term that excluded or restricted liability for misrepresentation. The clause was therefore within the scope of s.3 of the Misrepresentation Act 1967 (“MA”) and subject to the reasonableness test under s.11(1) of the Unfair Contracts Terms Act 1977 (“UCTA”): First Tower Trustees Ltd v CDS (Superstores International) Limited [2018] EWCA Civ 1396.

Some key points from the Court of Appeal’s analysis include:

• Where a clause simply delimits the parties’ primary obligations, it is not an exclusion clause and therefore the reasonableness test in UCTA will not apply. Such clauses define the basis on which the parties are contracting. Lewison LJ, who gave the leading judgment, suggested that this is how the label “basis clause” in some of the cases should be understood, though Leggatt LJ, who delivered a concurring judgment, suggested that the term is best avoided in the interests of clarity.
• A non-reliance clause, in contrast, seeks to prevent liability arising in misrepresentation by stating that no representations have been made or, if made, have not been relied on, and therefore setting up a contractual estoppel. The Court of Appeal held that such a clause amounts to an attempt to exclude liability for misrepresentation. Accordingly, it is subject to s.3 MA and therefore the reasonableness test under s.11 UCTA.
• Leggatt LJ commented (obiter) that it does not matter whether the non-reliance clause is contained in a contract entered into after the representation was made (as in this case) or before it (eg in a confidentiality agreement entered into before the main transaction). Where it is in a contract agreed before the representation, however, it might affect whether the elements of the misrepresentation claim are in fact established, eg whether a particular communication would reasonably be understood as making a representation or whether it was in fact relied on.

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