Entire Agreement Clause can Preckude an Action in Tort for Negligent Misrepresentation
No. 2002 Taurus Ventures Ltd. v. Intrawest Corp. 2007 BCCA 228 (CanLII)
A Court in British Columbia dismissed a claim for negligent misrepresentation because the parties, who were both sophisticated, agreed to an “entire agreement” clause.
If the agreement contains an entire agreement clause, the clause can operate to exclude oral representations, especially if the parties are sophisticated. Drafters should ensure that all the details of the deal have been included in the written agreement, and that the parties are not relying on oral representations that have not been captured in writing.
In No. 2002 Taurus Ventures Ltd. v. Intrawest Corp. (BCCA) the appellants, Intrawest, entered into a written contract to develop land for the defendant, Taurus, in Whistler. The defendants claimed that the appellants represented that the contract would include the development of ski runs and ski trails, at the expense of the appellants. The written contract, however, did not provide for the construction of ski trails or ski runs. The defendants sued for damages for, among other claims, a breach of collateral contract, and negligent misrepresentation.
The trial judge found Intrawest liable for negligent misrepresentation, but did not find a collateral contract between the parties. Intrawest appealed, arguing that they could not be found liable for negligent misrepresentation because the written contract contained an “entire agreement” clause. Taurus appealed the finding of no collateral contract.
The appeal court found that the “entire agreement” clause prevented Taurus from claiming in tort for negligent misrepresentation. The Court did not say that an “entire agreement” will preclude an action for negligent misrepresentation in all cases. Rather, it is to be determined on a case by case basis. In this case, the sophistication of the both parties were strong factors in the decision. The issue of whether the appellant breached a collateral contract was remitted to the Supreme Court of Canada, but no decision has been reported.
Drafters should keep in mind that this case dates before the Supreme Court of Canada decision in Bhasin v. Hryrew, and results may vary depending on the sophistication of the parties and the presence of dishonesty or unconscionability.
To read the full case on CanLII, click here.