AXA Sun Life Services PLC v Cambell Martin [2011] EWCA Civ 133

Entire agreement clauses are commonly deployed in commercial contracts and more often than not form part of the standard boiler plate provisions. Such a clause aims to prevent the party relying upon it from being liable for statements or representations (including pre-contractual representations), except as expressly laid out in the contract. 

AXA Sun Life Services PLC v Cambell Martin underscores the need for clear drafting of such clauses where the clause attempts to exclude liability for pre-contractual misrepresentation and highlights the risk of relying upon a standard form of wording.   

The Court of Appeal held that the following wording was not sufficient to exclude liability for claims based on misrepresentation, but could prevent claims for breach of collateral warranty:

"This Agreement [...] constitutes the entire agreement [...] this Agreement shall supersede any prior promises, agreements, representation, undertakings or implications whether made orally or in writing between you and us relating to the subject matter of this Agreement [....]".

AXA had brought a claim against the defendant companies and insurance advisors for the recovery of sums that were due under a number of contracts. In their defence to the damages claim the defendants relied upon alleged misrepresentations, claiming that they had been induced to enter into the contracts by negligent misrepresentation and collateral warranties. Each contract contained an identical entire agreement clause and AXA sought to rely upon those clauses.  

The Court of Appeal considered that the entire agreement clause, having been based on a boilerplate precedent, was not precise enough on the issue of misrepresentation. It held that, on its true construction, the language was not intended to exclude liability but rather it sought to ensure that prior representations did not become terms of the contract. If a party intends to exclude liability for pre-contractual misrepresentation, clear language to that effect is required.

The Court of Appeal also found that the entire agreement clause was itself reasonable under the Unfair Contract Terms Act 1977 (UCTA). While entire agreement clauses are not considered exclusion clauses, UCTA may be applicable where:

  1. one party is dealing as consumer and the other on its standard terms of business; and
  2. the pre-contractual representation or promise affects the performance that is reasonably expected of the consumer party to the contract.

However, UCTA was considered only in the context of the collateral warranty. Care should be taken when drafting a clause which is intended to comply with the reasonableness requirements of UCTA, while also excluding liability for pre-contractual misrepresentations.