When reaching a deal, it is often the case that the parties are on positive terms, a deal is done, a contract is signed, (or in some cases the agreement is nothing more than verbal). Sometimes, during the process of negotiation, comments and remarks are made, which are often forgotten or "without thinking". On some occasions, these comments are inaccurate but little is thought of them at the time, but when there is risk of a fallout, generally, the first thing parties do is consider the terms of the agreement and then call a solicitor. A recent ruling in the High Court has served as a reminder to those involved in negotiations to give careful thought to the representations made.
In the case of Al-Hasawi v Nottingham Forest Football Club Ltd [2018] EWHC 2884, it was held that an entire agreement clause in a share purchase agreement did not exclude misrepresentation claims.
Briefly, an entire agreement clause is used in order to prevent statements that are not set out in the written agreement from being included in the contract.
The case stems from the claim brought by Nottingham Forest Football Club against its former owner, Fawaz Al Hasawi in 2017 and reiterates current authority that clear words are required in order to exclude misrepresentation claims. The clause in question only stated as follows:-
"This agreement (together with the documents referred to in it) constitutes the entire agreement between the parties and supersedes and extinguishes all previous discussions, correspondence, negotiations, drafts, agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter. "
This wording was not sufficiently clear to exclude misrepresentation claims and therefore greater losses were capable of being claimed for misrepresentation.
The judgment serves as another reminder of the importance of ensuring contractual terms are drafted clearly, concisely and accurately to reflect the intentions of both parties.
At Ramsdens, our specialist Litigation team regularly provide commercial advice on all aspects of contractual disputes and assist businesses in resolving disputes. Whatever the nature of your dispute call Ramsdens Solicitors for expert advice. Get in touch with us by calling 01484 821 500, or by email at info@ramsdens.co.uk to speak to one of our commercial dispute solicitors.