AXA Sun Life Services v Campbell Martin – Case Summary

AXA Sun Life Services Plc v Campbell Martin Ltd

Court of Appeal

Citations: [2011] EWCA Civ 133; [2012] Bus LR 203; [2011] 2 Lloyd’s Rep 1.


The claimant was an insurance company. They agreed to act as a representative for the defendant companies. The agreement was on the claimant’s standard terms. Clause 24 of the contract stated that:

‘This agreement and the schedules and documents referred to herein constitute the entire agreement and understanding between you and us…this agreement shall supersede any prior promises, agreements, representations, undertakings or implications whether made orally or in writing between you and us relating to the subject matter of this agreement but this will not affect any obligations in any such prior agreement which are expressed to continue after termination.’

Clause 15.2 barred the defendants from relying on any right of set-off, counterclaim or credit against the claimant. Clause 1.6 of Schedule 4 stated that the claimant’s statements as to how much money the defendant owed them was binding unless there was a manifest error.

The claimant brought an action against the defendants for sums due under the contract. The defendants sought to assert misrepresentation and breaches of warranties and implied terms against these claims.


The parties sought the determination of the following as preliminary issues:

  1. Did the terms of the contract prevent the defendants from relying on counterclaims of misrepresentation and breach of warrant/implied terms?
  2. Were the terms of the contract void for unreasonableness under the Unfair Contract Terms Act 1977?

The Court of Appeal held that clause 24, properly construed, did not exclude liability for misrepresentation. It did not used any of the normal formula for clauses which aim to exclude liability for misrepresentation. It did not refer explicitly to misrepresentations. All the clause did was exclude liability for breach of collateral warranties. Clause 24 did not, therefore, stop the defendants from relying on misrepresentation as a defence. It could only bar them from relying on breach of warranty.

Meanwhile, all three clauses were subject to the test of reasonableness under the Unfair Contract Terms Act 1977. The Court decided that decided that clauses 24 and 1.6 of Schedule 4 were reasonable, but not clause 15.2. They relied on the following factors:

  • Both parties were commercial organisations. Commercial organisations are expected to read agreements before they sign them. It was therefore assumed that the parties ought to know the terms of the contract.
  • While the defendant was unlikely to be able to contract with third-parties on different terms since they were relatively standard in the industry, they could have carried on the business themselves instead of appointing representatives;
  • The purpose of clause 24 was to provide certainty in the parties’ legal relations and limit the potential costs of litigation;
  • Clause 1.6 of Schedule 4 was of limited effect since it should not be difficult for the defendant to identify and prove any manifest error;
  • Clause 15.2 was incongruous since the contract preserved the claimant’s rights to set off and defences.
This Case is Authority For…

Normally, the purpose of an ‘entire agreement clause’ is to prevent the parties from seeking to rely on collateral warranties and exclude liability for misrepresentation. However, unless the clause explicitly deals with liability for misrepresentation, it will normally be construed as only barring a claim based on collateral warranties. It will not prevent liability for misrepresentation.


The court thought that entire agreement clauses do not fall within s.3(2)(a) of the Unfair Contract Terms Act 1977. This is because they do not exclude or restrict liability for breach of contract.

However, the court was satisfied that entire agreement clauses fall within s.3(2)(b). This provision applies to clauses which allow the defendant to ‘render a contractual performance substantially different from that which was reasonably expected of him’ or no performance at all. This is because precontractual representations can affect the performance which the parties reasonably expect. Entire agreement clauses also fall within the reasonableness provisions of s.3 of the Misrepresentation Act 1967.