6 October 2011 | Liz Fletcher
Does an ‘entire
agreement’ clause also incorporate misrepresentations?
The case
AXA entered into standard
agreements with various companies (the “appointed representatives”). Following
termination of these agreements, AXA made claims for outstanding sums due from
the appointed representatives and a dispute arose in relation to provisions in
these agreements.
The appointed
representatives disputed the amounts claimed. They also argued AXA had made
misrepresentations about the exclusivity of the arrangements and the processing
of business referred to them.
One of the clauses in
dispute was the entire agreement clause included in the standard agreement.
This clause is used to reinforce
the presumption the written agreement contains all the terms of contract. This
means the parties can’t rely on any other representations that have been made
before the contract was entered into, unless incorporated.
The Court considered
that
while this wording did state the agreement would supersede all
“representations”, it did not expressly preclude a claim in misrepresentation.
But it also found the
alleged statements the appointed representatives relied on were at best,
collateral warranties, and not misrepresentations.
What this means
This decision shows how important it is to use clear drafting to
ensure the intention of the parties is reflected.
General themes of
interpretation cannot be used to save a poorly drafted clause. The failure to
use clear drafting and the reliance on a simple form of entire agreement clause
would have resulted in AXA being unable to preclude any claims for
misrepresentation.
Simple form clauses do
have their limits and while standard wording can be relied on to preclude
certain claims, the subject matter of the contract in question should always be
considered. Certain elements will need to be the subject of separate bespoke
provisions – the more valuable the right that is sought to be modified or
excluded, the clearer the language will need to be.
☛ Liz Fletcher is an associate at Hugh James
