## Facts

- Springwell Navigation Corp (Springwell), a shipping company, entered into a written financial agreement with JP Morgan Chase Bank (JPMorgan), which involved varying its existing loan terms and engaging in interest rate swaps.
- Springwell alleged that JPMorgan staff had provided inaccurate information regarding the financial consequences of the new arrangements, including incorrect details on the costs associated with early termination of the swaps.
- Springwell claimed it relied on these alleged misrepresentations when accepting the terms.
- The contract between the parties included a non-reliance clause stating that Springwell did not base its decisions on any JPMorgan representations outside the written agreement, and included an entire agreement clause confirming the document contained all terms of the contract.

## Issues

1. Whether a non-reliance clause and entire agreement clause in a written financial contract prevent a party from bringing claims based on alleged pre-contractual misrepresentations.
2. Whether the presence of unequal bargaining power between the parties would invalidate the effect of such contractual clauses.
3. How non-reliance clauses interact with section 3 of the Misrepresentation Act 1967 regarding exclusions or limitations of liability for misrepresentation.

## Decision

- The Court of Appeal upheld the validity of the non-reliance and entire agreement clauses, rejecting Springwell’s claims.
- The court found that parties with experience in financial agreements can use explicit clauses to allocate risks and responsibilities.
- The non-reliance clause placed responsibility on Springwell to verify pre-contractual statements, blocking claims based on alleged misrepresentations outside the written contract.
- The court dismissed arguments that inequality of bargaining power made the clauses invalid.
- The court held that, due to the non-reliance clause, section 3 of the Misrepresentation Act 1967 did not require consideration, as no actionable misrepresentation claim remained.

## Legal Principles

- Non-reliance and entire agreement clauses are effective in preventing parties from relying on alleged pre-contractual statements.
- Courts will respect contractual freedom and the risk allocation agreed between sophisticated commercial parties, especially in complex financial transactions.
- Section 3 of the Misrepresentation Act 1967 allows exclusion of liability for misrepresentation where reasonable, but a valid non-reliance clause can preclude the need for such analysis.
- Clear contract drafting is critical to ensure enforceability of these clauses and to minimize disputes about pre-contractual representations.

## Conclusion

The decision in Springwell Navigation Corp v JP Morgan Chase Bank confirms that non-reliance and entire agreement clauses are effective tools for managing liability for pre-contractual misrepresentations in sophisticated commercial contracts, reinforcing the need for clear drafting and careful negotiation between experienced parties.


Springwell Navigation Corp v JP Morgan Chase Bank [2010] EWCA Civ 1221