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Entire agreement clause
Lloyd v Sutcliffe
[2007] EWCA Civ 153
This case concerned a landowner and a developer. The landowner orally agreed that the developer should become an equal shareholder in the land-owning company and would develop the land in return for an equal share in the profits. The shares in the land-owning company were duly transferred to the two parties, who then entered into a written agreement, which said nothing about profit-sharing arrangements, but contained an “entire agreement” clause. The entire agreement clause stated:“This Agreement supersedes any previous agreement between the parties in relation to the matters dealt with herein and represents the entire understanding between the parties in relation thereto.” At first instance, the High Court held that a proprietary estoppel had arisen in favour of the developer, but the landowner appealed, partly because of the existence of the entire agreement clause. The Court of Appeal, by a majority of 2-1, dismissed the appeal. They said that the entire agreement clause could only apply to matters that had been dealt with or disposed of in the agreement, but the agreement contained no profit-sharing arrangements, and so the entire agreement clause could not affect this issue. The Court also held that the entire agreement clause could only preclude reliance on extraneous matters that arose before the date of the agreement; in this case, the agreement had been confirmed by words and conduct after the date of the agreement.
In the recent case of Yeomans Row v Cobbe, which also concerned proprietary estoppel in favour of a developer, the agreement between the parties was purely oral, but in this case, there was a written agreement that contained an entire agreement clause. However, the developer still benefited from a proprietary estoppel.
Note that an entire agreement clause will only apply to:Matters arising before the date of the agreement; and
Matters fully dealt with in the agreement. For the basic principles that relate to entire agreement clauses and a fuller discussion see the article dealing with misrepresentation in contracts for the sale of land.
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