Thinc Group recruited Ashley and Helen Armstrong as independent financial advisers. During the course of protracted oral negotiations,Thinc offered the Armstrongs a payment of 50% of their previous year’s gross income, as an inducement for joining the company and bringing their significant customer base with them. The only condition was that they had to remain with Thinc for 3 years. The parties then entered into a written agreement (which did not contain an ‘entire agreement’ clause), which provided that the upfront payment would be repayable on the occurrence of a ‘repayment event’, including termination of the contract by Thinc for any reason. As you have by this point expected, Thinc terminated the Armstrongs’ employment within 3 years and asked for the repayment of the inducement.

The English Court of Appeal has upheld the trial judge’s finding that the oral representation was a collateral warranty which overrode the written terms: Thinc Group v Armstrong, [2012] EWCA Civ 1227. Thinc’s oral assurance to the Armstrongs that there were ‘no other conditions’ precluded it from relying on subsequent terms which were at odds with that. Looking at the commercial realities, it was clear that the inducement was intended as the price of the goodwill of the Armstrongs’ previous business, and the fact that the written agreement did not address the transfer of their client base suggested that it did not represent the whole of their bargain with Thinc. The written agreement did contain a ‘no reliance’ clause stating that the parties had not relied on earlier representations, but Thinc conceded that this did not preclude the existence of a collateral warranty. There was an odd clause in the written agreement allowing Thinc to resolve ambiguities between that document and ‘any other contract or agreement’, but Thinc’s reliance on it was what Rix LJ called an ‘own goal’: the clause effectively recognised that there might be other agreements between the parties out there, including a collateral warranty.  

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