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Whole Agreement Clause - Unreasonable
Goff v Gauthier, ChD 27 March 1991
This case related to a commercial contract for the sale of land. To put pressure on the purchasers to exchange, the seller's solicitor informed the buyers solicitors that he had instructions that unless the buyer exchanged contracts that day, he was to withdraw the contract and re-submit it to another buyer. The buyer exchanged, but then did not complete. The seller claimed damages and the forfeiture of the deposit paid. The buyer resisted, asserting that he had been inveigled into entering into the contract by a misrepresentation by the seller's solicitors.
The plaintiff relied in defence of his actions on a common form contract clause- an 'entire agreement' clause to the effect that the buyer entered into this contract relying only on what was in the contract - ie that their had been no representations upon which he had relied save those set out in the contract. Any representation of the sort alleged was not so set out, and therefore was to be disregarded.
The judge held that the representation had been made, that it was false, and that the buyer had relied upon it. He went on to find that it would not be fair and reasonable to allow the plaintiff to take the benefit of it. The claim was lost.
The case is significant because such clauses are very common, and are relied upon extensively by many commercial operators, as much in the computer industry as anywhere else. One typical situation where it might be relevant is where the plaintff says that his offer must be accepted today, or that it will be withdrawn, that it is a once and only offer. Such representations are notoriously common and notoriously untrue. Companies who seek to exclude responsibility for such representations should take great care. The exclusion clause will not necessarily be of help to them.
This case also reflects the earlier case of Thomas Witter Ltd v TBP (ChD, unreported, 15 July 1994) where a similar 'entire understanding clause' did not protect the sellers of a business from liability for misrepresentations made during pre-sale negotiations. There is also an article by Ronald Paterson in the Law Society's Gazette of 22 February 1995, with helpful suggestions.
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