Axa Sun Life Services Plc v Campbell Martin Ltd & Ors

An entire agreement clause which merely states that the written contract supersedes prior representations does not exclude liability for misrepresentation. Clear language is required, such as an agreement that no representations were made or relied upon, or an express exclusion of liability.

Such a clause may nevertheless prevent collateral warranties from acquiring contractual effect. It does not exclude true implied terms intrinsic to the written agreement, although it may exclude terms arising from extrinsic matters.

No-set-off and conclusive-evidence clauses may take effect according to their terms, but remain subject to statutory reasonableness. A one-sided no-set-off clause lacked justification and was unreasonable. Conclusive-evidence clauses preserving challenges for obvious error were reasonable.

AXA entered standard-form appointment agreements with several financial advisory companies, whose liabilities were guaranteed by individuals. Following termination, AXA claimed commission clawbacks and repayment of development and business benefits. The defendants alleged misrepresentations, collateral warranties, implied terms and counterclaims.

HH Judge Graham Jones determined common preliminary issues concerning the construction of the entire agreement, no-set-off and conclusive-evidence provisions. He answered the construction issues against AXA and therefore did not determine statutory reasonableness.

AXA appealed from the orders dated 24 March 2010. The central questions were what the disputed clauses meant, whether the Unfair Contract Terms Act 1977 or Misrepresentation Act 1967 applied, and whether the clauses were reasonable.

1. The appeals were allowed in part. Clause 24 excluded collateral warranties but did not exclude liability for misrepresentation. Its language concerned contractual agreement: the word “representations” appeared among words of contractual import, while “supersede” did not clearly withdraw representations or exclude liability for them. Clear language is required to exclude misrepresentation liability. Springwell Navigation Corporation v JP Morgan Chase Bank [2010] EWCA Civ 1221 concerned materially different language acknowledging that no representations had been made.

2. Clause 24 did not exclude true implied terms said to be intrinsic to the agreements. Such terms formed part of the agreement described in the clause and were not prior matters superseded by it. Terms arising from matters extrinsic to the written agreements were excluded.

3. Clause 15.2 contractually precluded set-off and withholding of payment. Granting a stay of AXA’s judgment pending a counterclaim would be inconsistent with that bargain. The clause was, however, subject to the reasonableness requirement under sections 3 and 13 of the Unfair Contract Terms Act 1977. AXA had not justified a provision which gave it a right of set-off while denying the appointed representatives an equivalent right. The clause was therefore unreasonable.

4. Clause 1.6 of Schedule 4 and clause 5.5 made AXA’s certificates and commission calculations conclusive, subject to manifest error. “Manifest” meant obvious, rather than merely apparent on the face of the document. The representatives could monitor commissions and clawbacks and demonstrate an obvious mistake. Both clauses were reasonable.

5. The reasonableness assessment concerned the circumstances known or reasonably contemplated when the contracts were made. The commercial setting, the representatives’ familiarity with written financial agreements, the prominence and industry use of the terms, available alternatives, the contractual purpose and the short termination notice were material. Clause 24 was reasonable because it provided commercial certainty and the representatives could terminate on two months’ notice.

6. Rix LJ, with whom Stanley Burnton and Wilson LJJ agreed, explained obiter that Curtis v Chemical and Dyeing Co [1951] 1 KB 805 was decided by the majority on incorporation: the misrepresented exemption never became part of the contract. It did not establish the broader reasoning attributed to Denning LJ.

1. Court of Appeal (Civil Division): The appeals were allowed in part. The court substituted differentiated answers to the preliminary issues: collateral warranties were excluded, misrepresentation and intrinsic implied terms were not; the conclusive-evidence clauses were effective and reasonable; and the no-set-off clause was contractually effective but unreasonable.

2. High Court, Queen’s Bench Division, Bristol District Registry, Mercantile List: HH Judge Graham Jones answered the first three preliminary issues against AXA and consequently did not determine statutory reasonableness. The orders appealed were dated 24 March 2010. No neutral citation is stated in the judgment.