Court of Appeal construes terms of standard form agreement between insurers and their agents.

A number of disputes concerning the construction and effect of certain terms arose out of the termination of standard form agreements pursuant to which AXA engaged a number of agents to provide services in relation to mortgage and investment products.

Four issues arose:

  1. Did clause 24, “the entire agreement” clause, preclude the agents from relying on the insurer’s alleged misrepresentations and/or breaches of warranty and/or implied terms, because it stated: “This Agreement … constitute the entire agreement and … shall supersede any prior … agreements, representations, undertakings …”?
  2. Did clause 15.2, “the exclusion of set-off” clause, preclude the agents from withholding payment of monies payable to the insurer as a set-off for the amounts the insurer owed them, because it stipulated: “All Monies payable by [the agents]… shall be paid … without any deduction or withholding … and [the agents] will not … assert any credit, set-off or counterclaim against [the insurer]...”?
  3. Did clause 1.6 of Schedule 4 prevent the court determining the amounts due from the agents relating to the repayment of some allowances, in the absence of manifest error, because the clause specified: “A statement … signed by [the insurer] … as to ... the Monies due … save for manifest error, be final and conclusive and binding on [the agents]”?
  4. Were the clauses enforceable against the agents having regard to the Unfair Contract Terms Act 1977 (UCTA)?


The Court of Appeal held as follows:

Issue 1: The entire agreement clause was effective to exclude collateral warranties but not implied terms which gave the agreement business efficacy and which were not made “prior” to the agreement. Nor did it have any effect on misrepresentations of fact. Clause 24 concerned only matters which the parties had agreed, whereas the essence of misrepresentation was concerned with inaccurate terms and which, therefore, could not fall within the scope of “representations”. On the facts of this case, however, the court found that the statements the agents relied on were more likely to be, at best, collateral warranties, and therefore excluded by clause 24.

Issues 2 and 3: On the basis of the assumed facts, the court concluded that the other two clauses took effect in accordance with their terms.

Issue 4: As for whether the clauses were reasonable under UCTA, the court held that the “entire agreement” clause was not an exemption clause of the kind with which UCTA was principally concerned, although the other two fell within the scope of the Act and were subject to the reasonableness test. The court noted that, whilst AXA was an immeasurably larger organisation, the agreements were made between commercial organisations, in a commercial context. Furthermore, the agents could also have avoided those terms by choosing to carry on their businesses as IFAs.

However, in the absence of an explanation from AXA as to the need for the “exclusion of set-off” clause, clause 15.2 could not be held to be reasonable, particularly as clause 15.1 did not preclude them setting-off amounts due to the agents. Clause 1.6 of Schedule 4 was held to be reasonable, as it was possible to identify “manifest error” in AXA’s calculations. Accordingly, the agents would not be bound by AXA’s statement.


This case provides some useful guidance as to what similar “entire agreement” clauses might cover and highlights the need to clearly express the parties’ intention to exclude liability for misrepresentation to achieve contract certainty. This can be done in a number of ways: by stating the parties’ agreement that there have been no representations made; by stipulating that there has been no reliance on any representations made; or by expressly excluding liability for misrepresentation.

A further point to note is that clause 15.2, preventing the agents from setting-off monies owed against monies due, was held to be unreasonable under UCTA, primarily it seems because it was one-sided, despite the court reiterating the general principle that commercial organisations should be expected to contract on the terms contained in the agreement they signed. The reason for this may be that the court noted that AXA gave no explanation for the need for so one-sided a clause, raising the possibility that, as long as an explanation is given, even a clause of this type might be upheld.