An exclusion clause in a contract was reasonable in all the circumstances for the purposes of the Unfair Contract Terms Act 1977.

Most contracts for the sale of land include conditions excluding or restricting the seller’s liability for statements made in the course of negotiations between the parties. However, sellers seeking to rely on such provisions must show that they are reasonable. Lloyd v Browning [2013] EWCA Civ 1637; [2013] PLSCS 314 concerned representations made in the course of negotiations for the sale of a disused barn with planning permission for conversion into residential accommodation. The buyers claimed that the sellers had shown them plans that included an extension to the barn, which would have changed the building from an “L” shape into a “U” shape. The buyers were members of the same family and wanted a property where they could live together in two separate residential units. The “U” shaped building suited them admirably. Unfortunately, the council had rejected the plans seen by the buyers on the ground that the extension would be contrary to its planning policies, and had approved a different set of plans that excluded the extension. The planning permission itself did not expressly refer to the approved plans and the council did not place copies of the approved plans on its files for public inspection. The buyer’s solicitors did not raise any enquiries about the planning permission because the buyers informed them that they had employed an architect and planning consultant to advise them. The planning consultant inspected the planning file at the council’s offices and informed the buyers that the planning permission made no reference to the extension. However, she had no reason to believe that this was a cause for concern – and so the stage was set for the events that followed. The contract for the sale of the barn included a clause stating that the buyers had inspected the property and were entering into the contract solely as a result of their inspection. They also accepted that they had not been induced to enter into the contract by any statements made by the sellers, unless such statements had been confirmed in writing by the seller’s solicitors. Was the exclusion clause reasonable in all the circumstances of this case? The Court of Appeal decided that it was. The problem arose because the buyer’s solicitors and planning consultant did not know what each other had been instructed to do. The buyers had not alleged that the sellers had acted fraudulently; they had pressed for exchange of contracts and the sellers did not what advice the buyers had received. Both parties were legally advised and the buyers had retained an architect and a planning consultant as well. The clause was not was “take it or leave it” clause that appeared in the small print. It was a special condition that had the general imprimatur of the Eastbourne Law Society and was agreed by legal advisers acting for parties of equal bargaining strength. Importantly, the condition did not exclude the sellers’ liability completely. It permitted the buyers to rely on written statements made by the sellers’ solicitors and the Court of Appeal took the view that the buyers could, and should, have protected their position by making further enquiries of the council or instructing their solicitors to obtain written confirmation that the plans that they had seen had been approved by the council. Allyson Colby is a property law consultant