01st May 2018
Plugging the Gap: Entire Agreement Clauses
Following a number of electrical-related incidents at her rented café premises (including a small fire and a sparking plug socket) and the ongoing failure of the landlord to provide an electrical certificate, the tenant was forced to stop operating her business from its premises. When the landlord eventually procured an electrical inspection, the electrician inspecting the premises deemed the electrical installation as ‘unsatisfactory’.
The tenant sought to bring a claim against her landlord, seeking to recover the losses which occurred as a result of the café closure. Prior to entering into the lease, the tenant relied on the landlord’s confirmation that the café premises had passed an electrical inspection and was safe to operate from. A question mark also arose in relation to who had responsibility for the repair of electrical installations at the premises: the lease did not contain any express wording to deal with this point. Whose role was it?
Whilst the tenant pleaded that a term ought to have been implied into the lease so as to make the landlord responsible, the landlord sought to rely on the ‘Entire Agreement’ clause within the lease. The ‘Entire Agreement’ clause stated that the lease
‘constitutes the entire agreement and understanding of the parties relating to the transaction contemplated by the grant of this lease and supersedes any previous agreement between the parties relating to the transaction’
(meaning that the landlord’s prior assertions regarding the electrical safety of the premises couldn’t be relied upon as part of the lease).
The Court of Appeal upheld the earlier decision in favour of the tenant, implying a term placing an obligation on the landlord to ensure that the electrical installation ‘is safe and the subject of a current Electrical Safety Certificate’. The Court of Appeal noticed that the lease appeared to place more stringent obligations on the tenant rather than the landlord; ‘a plain and obvious gap’ was noted. To ‘ensure that the lease had practical and commercial coherence’, the Court of Appeal found that it was necessary to place the responsibility for the electrical inspection on the landlord – in spite of the ‘Entire Agreement’ clause.
For further information please contact Lauren Coote. Lauren recently qualified into Hewitson’s Cambridge Real Estate litigation team after training with the firm. and being named by The Cambridgeshire & District Law Society as Trainee Lawyer of the Year. Contact Lauren on 01223 461155 or click here to email her.