Are Non-reliance statements reasonable under the Unfair Contract Terms Act 1977 (UCTA)?

In the recent case of First Tower Trustees Ltd v CDS (Superstores International) Ltd [2018] EWCA Civ 1396,

Court of Appeal judges unanimously upheld a High Court’s decision that a non-reliance statement in a commercial lease had the effect of excluding liability for misrepresentation, but was ineffective because it failed the test of reasonableness under the Unfair Contract Terms Act 1977 (UCTA).

The disputed clause stated that "the tenant acknowledges that this lease has not been entered into in reliance wholly or partly on any statement or representation made by or on behalf of the landlord".

The principal grounds for appeal was that the trial judge had been wrong to conclude that a non-reliance statement was an exclusion of liability falling within the ambit of section 3 of the Misrepresentation Act 1967 (1967 Act), and was therefore subject to the UCTA reasonableness test.

The Appeal Court rejected this argument, finding that section 3 of the 1967 Act applied to the non-reliance statement. The court went on to confirm that the exclusion was unreasonable under UCTA.

While the court considered that the landlord's arguments that the non-reliance statement was subject to negotiation and that the parties were both legally represented had some force, it was particularly relevant in this case that the non-reliance statement precluded reliance on pre-contract enquiries, given their importance in the field of conveyancing.

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