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Common exclusion clause is upheld 4 January 2014

It is common for property contracts to contain an exclusion clause preventing the buyer from relying upon statements from the seller, other than information contained in replies to enquiries before contract.  The Court of Appeal has recently held, in Lloyd v Browning [2013] EWCA Civ 1637, that such a clause was fair and reasonable in the circumstances, for the purpose of section 11 Unfair Contract Terms Act 1977.  The clause formed one of the special conditions in the contract, and was recommended by the local law society.  Most importantly, its inclusion had been agreed by the parties’ legal advisors, and there was no disparity of bargaining power between the two parties.

The relevant clause in this case read:

“The buyer hereby admits that he has inspected the property and he enters into this contract solely as a result of such inspection and upon the basis of the terms of this contract, and that in making this contract no statement made by the seller or his agent has induced him to enter except written statements, if any, made by the seller’s conveyancers in replies to enquiries raised by the buyer’s conveyancers or in correspondence between the parties’ conveyancers.”

The case was brought after the buyers found that they were unable to build an extension to a farm building as they had expected.  They had been shown an incorrect set of plans; the plans that had actually been approved when planning consent had been granted for conversion of the farm building into residential accommodation had not included the extension.  The buyers had engaged a professional planning consultant, who had carried out investigations for them.

Davis LJ concluded wryly:

“This present case, as it seems to me, is at all events not a case of buyers being tripped up unfairly by small print. It is in fact something of an irony attaching to the claimant purchasers’ present case that they have in effect themselves (by issuing and pursuing these proceedings) retracted their own statement, freely given in Condition 8 itself, as to non-inducement.”

Click here for a copy of the Court of Appeal’s transcript.

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