“Entire agreement” clause rescued by entire agreement to exclude misrep claim
The High Court’s recent decision in NF Football Investments v NFFC is unusual and somewhat surprising. The case concerns a share sale where the buyer complained that the seller had mispresented the company’s liabilities by some 3.8 million.
By way of background, the share purchase agreement contained an “entire agreement” clause, which effectively states that any contractual discussions outside of the agreement cannot be relied on (i.e. if it isn’t included in the agreement, it doesn’t count). However, as the clause didn’t expressly exclude liability for misrepresentation claims, the seller argued that its alleged misrepresentations could not be relied upon by the buyer. The Judge agreed with the seller as, whilst the entire agreement clause didn’t exclude claims for misrepresentation, the Judge found that the parties must have intended to exclude claims for misrepresentation as the agreement included an obligation for the seller to indemnify the buyer for losses arising from the seller’s misrepresentations. This meant that the buyer’s claim of misrepresentation failed.
Charlotte Dennington – Day, Commercial & Dispute Solicitor, comments:
This case acts as a useful reminder that the court will look very closely at the entire agreement clause in addition to the context of the agreement when interpreting the parties’ intentions. Although this recent decision may give the impression that it is possible to defend a claim of misrepresentation even where an entire agreement clause does not exclude it, parties should still protect themselves against misrepresentation claims by ensuring that all of their contractual documentation has clear wording to exclude or limit liability for misrepresentation.
Howat Avraam Solicitors provide Commercial, Employment and Contract Dispute advice to companies and business owners. As business owners ourselves, we have a pragmatic in-house approach to resolving issues before they arise by working alongside our clients, often on monthly retainers. We are commercial, practical and entrepreneurial in our approach to legal services.
To discuss any commercial or legal matter on a no obligation basis, please contact Charlotte Dennington-Day, Commercial and Dispute Solicitor, on 020 3735 6700 or email Charlotte at Charlotte.Dennington-Day@hasolicitors.co.uk Alternatively, visit our website at www.howatavraamsolicitors.co.uk.
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