Cremdean Properties Ltd v Nash
Court of Appeal
Citations: (1977) 244 Estates Gazette 547.
Cremdean contracted with Nash to buy some of Nash’s property for development. Prior to the sale, Nash’s agents represented to Cremdean that the site had planning permission for 17,900 square feet of offices. In reality, it had permission for a far lower amount.
After the sale, Cremdean discovered the truth. They sued for rescission of the contract or damages for misrepresentation. In response, Nash pointed out that when they had invited tenders for the sale, the invitation document stated that all statements ‘are believed to be correct, [but] their accuracy is not guaranteed’. Additionally, the document stated that any pre-contractual statements did not form terms of the contract and should be verified by the buyer.
Cremdean argued that this clause was void for unreasonableness under Misrepresentation Act 1967, s.3. That provision states that:
‘If a contract contains a term which would exclude or restrict— (a) any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or (b) any remedy available to another party to the contract by reason of such a misrepresentation, that term shall be of no effect except in so far as it satisfies the requirement of reasonableness as stated in section 11(1) of the Unfair Contract Terms Act 1977; and it is for those claiming that the term satisfies that requirement to show that it does.’
- Was the term relied on by Nash unreasonable within the meaning of s.3 of the Misrepresentation Act 1967?
The Court of Appeal held that the clause was void for unreasonableness. This was because the scope of the clause was incredibly broad. It nullified any and all pre-contractual representations, even those made by agents with actual authority. The fact that the clause was not phrased in the language of an exclusion or limitation clause did not prevent it from falling within the scope of s.3.
This Case is Authority For…
The breadth of a clause is relevant to whether it is ‘reasonable’ within the meaning of unfair terms legislation.
The court noted that a representor cannot get around s.3 by cleverly phrasing exclusion clauses. For example, a clause stating that ‘no representation is being made by our representations’ would not circumvent s.3 and would still fall within its ambit. All that matters is that the effect of the clause is to exclude or limit liability for misrepresentation.