Lloyd & Anor v Browning & Anor

A non-reliance clause is not intrinsically objectionable. Its fairness and reasonableness under section 11 of the Unfair Contract Terms Act 1977 must, however, be assessed in the particular contract.

In a formal sale of land between parties with equal bargaining positions and legal advice, a negotiated condition excluding reliance on oral statements may be fair and reasonable. This is especially so where it preserves reliance on written replies to pre-contract enquiries or solicitors’ correspondence. If an oral representation is important, the purchaser can seek written confirmation before exchange. Incomplete information about the matter makes that precaution more important; it does not make the condition unfair.

The purchasers bought farm buildings and land with planning permission. The County Court found that the vendors had orally misrepresented that the permission approved an extension shown on unamended plans. The purchasers were induced to contract, but their claim under section 2(1) of the Misrepresentation Act 1967 was dismissed because condition 8 of the sale contract was fair and reasonable.

Condition 8 stated that the purchasers contracted solely on inspection and the contract terms, and not in reliance on statements by the vendors or their agents, save for written statements from the vendors’ conveyancers in replies to enquiries or correspondence. The purchasers appealed, contending that the condition failed section 11 of the Unfair Contract Terms Act 1977.

1. Appeal dismissed unanimously. The County Court was entitled to find that condition 8 was fair and reasonable for the purposes of section 11 of the Unfair Contract Terms Act 1977. The appellate court should respect a trial judge’s evaluative assessment of reasonableness, while intervening if satisfied that it was wrong: [1983] 2 AC 803.

2. The question was whether this condition was fair and reasonable in this contract, rather than whether such clauses were generally fair. Yet its legitimate purpose was material. A clause which requires reliance on written contractual or conveyancing material creates certainty and avoids disputes about alleged oral statements before exchange.

3. The relevant factors strongly supported the condition. Both sides had solicitors, the purchasers had also instructed architects and planning consultants, and the sale of land was a formal transaction whose agreed terms should be recorded in a signed document. The condition was a special condition agreed through lawyers between parties in corresponding negotiating positions. It was not unadvised consumer small print. It also allowed the purchasers to rely on written answers by the vendors’ solicitors, giving them a ready means to obtain a binding confirmation of any important oral matter.

4. The purchasers’ knowledge that the planning information was incomplete reinforced the need for further enquiry or written confirmation before exchange. The vendors were not uniquely able to establish the true position, which could also be obtained from the planning authority. Lady Justice Arden additionally observed that the purchasers had pressed for exchange despite knowing their information was incomplete; imposing liability for the vendors’ oral negotiating statements in those circumstances could itself be unfair to the vendors.

5. No material factor had been omitted from the County Court’s assessment. It was unnecessary to determine the issues raised by the respondents’ notice.

• Court of Appeal (Civil Division): dismissed the purchasers’ appeal and upheld the conclusion that the non-reliance condition was fair and reasonable under section 11 of the Unfair Contract Terms Act 1977: [2013] EWCA Civ 1637.
• Tunbridge Wells County Court: in an ex tempore judgment given on 1 February 2013, found oral misrepresentations which induced the purchasers to contract, but dismissed the claim because condition 8 was fair and reasonable.