Don’t forget the entirety of your entire agreement clause
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In the first in a series of blog posts on old contract chestnuts, I take a look at entire agreement clauses. If all your provision says is something like ‘this is the entire agreement, and supersedes all previous agreements’ that won’t be enough to exclude liability for misrepresentation. You need express agreement that pre-contractual representations are not being relied upon. This is not a new point, but it is one that gets missed.
Purpose of an entire agreement clause
An entire agreement clause is there to define the scope of the agreement between the parties. Whether you want it to be wide or narrow will depend on what promises the other side has made to you (or you to them), outside the contract, and whether you (or they) want to rely on those promises.
In a typical customer/supplier scenario, the supplier may make various statements, and agree heads of terms, relating to the proposed service to the customer. The customer will usually want to hold the supplier to as much of this as possible. That way, if the customer enters into the final agreement off the back of false statements, causing it to suffer loss, it has a claim. Conversely, the supplier will usually want to limit the scope to only the express terms of the final contract.
Deal expressly with misrepresentation
A basic entire agreement statement that ‘this is the entire agreement between the parties, and supersedes all previous agreements’ (or similar) establishes what the agreement is. However, it does not exclude liability for pre-contractual misrepresentation.
The exclusion of misrepresentation must be done expressly. See, for example: Al-Hasawi v Nottingham Forest followed more recently in MDW v Norvill. It is typically achieved by including the following:
- an acknowledgement by the parties that they have not relied on any express or implied representation, warranty, promise etc. (other than in this agreement); and
- a waiver of all rights and remedies which might have been available for such express or implied representation, warranty, promise etc.