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Disputes about entire agreement clauses come before the courts on a regular basis. One issue which comes up frequently is whether the entire agreement part of an entire agreement clause ("This agreement constitutes the entire agreement between the parties, and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, between them."), will, by itself, prevent claims in misrepresentation. Under the Unfair Contract Terms Act 1977 (UCTA), if parties enter into a contract on one party's written standard terms, then, as against that party, any attempt to: · Exclude or restrict his liability for breach of contract. · Claim that he is entitled to perform the contract substantially differently from that reasonably expected of him. · Claim that he is entitled to render no performance at all. · Exclude or restrict his liability for misrepresentation. is enforceable only to the extent it satisfies the UCTA reasonableness test. In order to pass the UCTA reasonableness test, a term must be fair and reasonable having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made. Reasonableness is assessed having regard to: · The strength of the bargaining positions of the parties. · Whether any inducement was given to the customer to agree the term. · Whether the customer knew, or ought reasonably to have known, of the existence of the term. The judge at first instance found that: · The entire agreement clause did not exclude liability for misrepresentation by AXA. · The set-off clause was unenforceable because the respondents had entered the agreement on the basis of misrepresentations made by AXA, which rendered the whole agreement unenforceable. · The question of whether the clauses satisfied the UCTA reasonableness test did not arise, given the judge's findings on the first three issues. On Appeal, the Court of Appeal found that: The Court of Appeal found that, as the entire agreement clause in question consisted of a basic entire agreement statement, the clause was ineffective to exclude misrepresentations. It was also ineffective to exclude terms being implied to give the contract business efficacy, but it did exclude collateral warranties and other implied terms. The Court of Appeal’s conclusions were based on the particular wording of the clause before them, but they are significant for practitioners because the court provided general guidance on the use of entire agreement clauses to exclude liability for misrepresentation. The Court of Appeal also considered UCTA's application to entire agreement statements, holding, that UCTA applies to entire agreement statements, as well as to the other elements of an entire agreement clause. The Court of Appeal further considered an entire agreement statement's effect on implied terms, and UCTA's application to set-off clauses and conclusive evidence clauses. All articles are for general purposes and guidance only and do not constitute legal or professional advice. Copyright 2011 Anassutzi & Co Limited. All rights reserved. Information may be shared or reproduced only if accompanied by the author’s name and bio.
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