Lease clause excluding liability for misrepresentation - pre-contract enquiries - misrepresentation - Unfair Contract Terms Act 1977
The appellant landlord appealed against a decision that it was liable to the tenant for misrepresentation. The judge had held that the landlord had in its replies to pre-contract enquiries misrepresented to the tenant that it had no knowledge of environmental problems affecting the property, when in fact it was aware of asbestos. The landlord sought to rely on a clause in the lease stating that the tenant had not entered into the lease in reliance on any representation made by the landlord. In dismissing the appeal, the Court of Appeal upheld the judge’s decision that (i) the clause was an attempt to exclude liability for misrepresentation and therefore fell within s 3 of the Misrepresentation Act 1967 and (ii) the clause did not satisfy the test of reasonableness under s 11(1) of the Unfair Contract Terms Act 1977. The judge had been right to stress the importance of pre-contract enquiries in the field of conveyancing. If a landlord could exclude liability, the important function of replies to enquiries before contract became worthless. Although there might be a case where, on exceptional facts, a clause precluding reliance on replies to enquiries before contract might satisfy the test of reasonableness, it was very hard to imagine what those facts might be.