November 22 2018
The High Court has held that an entire agreement clause in a commercial contract did not exclude liability for misrepresentation under section 2(1) of the Misrepresentation Act 1967: Al-Hawasi v Nottingham Forest Football Club [2018] EWHC 2884 (Ch). The court overturned the master’s decision…
The decision re-emphasises the generally accepted position that clear words are needed to exclude liability for misrepresentation. In general, the effect of an entire agreement statement (of itself) will be to avoid representations becoming contractual terms, rather than excluding liability for misrepresentation. Where a party wishes to avoid liability for misrepresentation, more will be needed, such as non-reliance wording or an express exclusion of liability.
Background
… the Buyer of the shares in Nottingham Forest Football Club Limited brought a claim against the Seller for misrepresentation, based on a spreadsheet which had been provided to the Buyer as part of the due diligence process and which it alleged had understated the Club’s liabilities.
The Seller applied to strike out the misrepresentation claim and/or obtain summary judgment on the basis of an entire agreement clause which stated:
“This agreement … constitutes the entire agreement between the parties and supersedes and extinguishes all previous discussions, correspondence, negotiations, drafts, agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter.”
… Master Bowles granted the Seller’s application, finding that the misrepresentation claim was expressly excluded by the entire agreement clause. The Buyer appealed.
Decision
The High Court judge… allowed the appeal, disagreeing with the master’s construction of the entire agreement clause.
The judge agreed that, in principle, the court is entitled to have regard to all the provisions of an agreement in construing any of them. However, he did not accept that contractual terms providing for one type of claim imply that all other types of claim are to be excluded. While it may be sensible for parties to ensure that elaborately negotiated provisions about how claims may be pursued cannot be evaded by framing what is essentially the same claim in some other way that did not mean the court could improve the bargain the parties had actually made by writing in provisions that the agreement did not contain. Further, in the present case, the Seller’s construction would exclude claims for misrepresentation whether or not they related to matters which duplicated the claims that were expressly provided for. While parties might agree such a term, that could not be inferred simply from the fact that they had made express provision for particular claims…