Non-reliance clauses under UCTA
Is a non-reliance statement subject to section 3 of the Misrepresentation Act 1967 and therefore also subject to the reasonableness test contained in the Unfair Contract Terms Act 1977 (UCTA)?
The landlords, First Tower Trustees Ltd and Intertrust Trustees Limited, entered into the following lease agreements for warehouse premises (leases) with the tenant, CDS (Superstores International) Limited:
- a lease which contained the following non-reliance statement at clause 5.8: "The tenant acknowledges that this lease has not been entered into in reliance or wholly or partly on any statement or representation made by or on behalf of the landlord";
- an agreement for lease (Agreement for Lease) which contained the following non-reliance statement at clause 12.1: "The Tenant acknowledge and agree [sic] that it has not entered into this Agreement in reliance on any statement or representation made by or on behalf of the Landlord other than those made in writing by the Landlord's solicitors in response to the Tenant's solicitors' written queries".
- In their replies to pre-contract enquiries, the landlords stated that they were unaware of any environmental problems relating to the premises. After giving their replies, the landlords were put on notice that the premises contained dangerous amounts of asbestos. The landlords failed to pass this information on to the tenants before completing the leases.
At first instance, the judge found that:
- the tenant had entered into the leases on the basis of the landlords' misrepresentation that there were no environmental problems at the premises;
- both non-reliance statements were attempts to exclude liability for misrepresentation under section 3 of the Misrepresentation Act, and subject to the UCTA reasonableness test;
- the non-reliance statement in clause 5.8 of the Lease failed the UCTA reasonableness test, because it did not allow the tenant to rely on the landlords' replies to pre-contract enquiries. Clause 12.1 in the Agreement for Lease passed the UCTA reasonableness test, because it did allow the tenant to rely upon such replies.
The Court of Appeal unanimously upheld the High Court's findings in relation to the non-reliance statements.
Why is this important?
This case provides confirmation that a non-reliance clause is subject to section 3 of the Misrepresentation Act and consequentially, subject to the UCTA reasonableness test.
Any practical tips?
When seeking to include valid non-reliance statements, you should ensure that provisions are reasonable (by reference to UCTA).