Lease agreement: "Entire agreement" clause

Citation

Lee, R. and Waterson, G. (2001), "Lease agreement: "Entire agreement" clause", Property Management, Vol. 19 No. 1. https://doi.org/10.1108/pm.2001.11319aab.007

Lease agreement: "Entire agreement" clause

Lease agreement: "Entire agreement" clause

Inntrepreneur Pub Co. v. East Crown Ltd [2000] 41 EG 209

The issue in this case was whether a provision in an agreement for a lease to the effect that the formal written agreement constituted the entire agreement between the parties precluded the tenant from contending subsequently that there had also been an additional collateral agreement, in this case to the effect that some two and a half years into the 30 year term of the lease one of the provisions contained in the lease, (a "beer tie" restricting the tenant from obtaining supplies otherwise than from the landlord's nominated supplier) would be released by the landlord.

The background to the case is that Inntrepreneur was set up in 1991 to take over the pubs then owned by both Courage Ltd (a subsidiary of Fosters Brewing Group) and Grand Metropolitan, the company being owned jointly by the two brewing companies. Further, Courage would acquire Grant Metropolitans brewing interests and brands. As a condition of the arrangement being allowed to go ahead, the Secretary of State for Trade and Industry, acting on the advice of the Monopolies and Mergers Commission, required certain undertakings to be given to the effect that any beer ties affecting pubs no longer owned directly by Inntrepreneur would be released by 28th March 1998. Crown, which was an existing tenant of the company under the terms of an earlier ten-year lease, then continuing by virtue of Part II of the Landlord and Tenant Act 1954, was subsequently offered and on 1 May 1996 accepted "subject to contract" the offer of a new 30-year lease, which contained a beer tie. The agreement for the new lease also said in clause 14 that:

14.1 Any variations of this Agreement which are agreed in correspondence shall be incorporated in this Agreement where that correspondence makes express reference to this Clause and the parties acknowledge that this Agreement (with the incorporate of any such variations) constitutes the entire Agreement between the parties.

14.2 Before executing this Agreement the Tenant and Guarantor have:

14.2.1 received independent professional advice about its terms or

14.2.2 been advised of the wisdom of taking independent professional advice but have chosen not to do and accordingly they have not relied upon any advice or statement of the Company or its solicitors.

By August 1995, however, Fosters had sold all its UK brewing interests to Scottish and Newcastle, so that henceforth Inntrepreneur had no direct relationship with any UK brewer. In consequence, the Inntrepreneur board applied on 24 June 1996 to be released from its undertakings relating to the beer ties, and in February 1997 this application was granted.

Crown argued that in the course of negotiations with Inntrepreneur certain representations had been made from time to time by that company's representatives to the effect that the beer tie contained in their own lease would be released by 28 March 1998.

The court referred to a number of cases and concluded that the effect of the "entire agreement" clause in this case was to deprive any such representations of taking effect as contractual provisions. The court also went on to consider the evidence of the various witnesses as to what had been said or implied during the course of negotiations and concluded that in this case there was nothing which could be constructed as a collateral warranty or promise by Inntrepreneur's employees or agents that the tie would be released in any event. Inntrepreneur was entitled to an injunction prohibiting future breaches of the tie, and damages to be assessed in respect of those breaches which had already occurred.