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Entire agreement clauses don't work...

15 April 2011

… or at least, they don’t do everything you might want them to.

A recent Court of Appeal decision took a similar line to the first instance ruling in BSkyB v EDS in reaching the conclusion that an entire agreement clause that said that the agreement constituted:

“the entire agreement between the parties” and would “supersede any previous promises, agreements, representations, undertakings or implications” made prior to the contract was not enough to exclude liability for misrepresentations made outside the contract terms, although it will prevent collateral warranties arising.

If you want to exclude liability for misrepresentation (as those who attend our regular in house lawyers forums will be all too aware) you need to have either an explicit exclusion of liability for misrepresentation or, better still a statement that neither party has relied upon statements not included in the contract.

Suppliers who want to exclude comments made by salespeople in negotiations need to check their contracts. For those seeking to bring a claim for misrepresentation this judgement, like BSkyB v EDS, breaks down an important obstacle to bringing a claim.

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Richard Nicholas

Richard Nicholas

Partner and Responsible for In House Lawyers

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