Brown v Ridley (Rev1) [2025] UKSC 7 (26 February 2025)

A buyer of a vintage car sought to rescind the contract due to misrepresentation after discovering significant defects. The seller relied on a contractual clause requiring the buyer to conduct their own inspection. The Supreme Court found the clause was unreasonable under UCTA 1977.

Facts

The claimant, Mr Ridley, purchased a 1928 ‘Phantom’ motor car from the defendant, Ms Brown, for a sum of £450,000. During negotiations, Ms Brown, a knowledgeable collector, represented the vehicle as being in ‘excellent original condition’ and ‘ready for immediate and reliable use’. The written contract of sale included Clause 5(b), a ‘non-reliance’ clause which stated that the buyer acknowledged they had not relied on any representations made by the seller and had satisfied themselves as to the car’s condition via an independent inspection. Mr Ridley, a less expert enthusiast, did not commission such an inspection. Upon taking possession, he discovered substantial structural rust and severe mechanical failures, rendering the car unsafe and not as described. Mr Ridley sought to rescind the contract and recover the purchase price, arguing he was induced by Ms Brown’s misrepresentations.

Issues

The principal legal issue before the Supreme Court was the effect and validity of Clause 5(b) of the sale agreement. The court had to determine two key questions: first, did the clause, on its proper construction, prevent the claimant from asserting that he was induced to enter the contract by the defendant’s pre-contractual representations? Second, if it did, was the clause fair and reasonable for the purposes of section 3 of the Misrepresentation Act 1967, which subjects such clauses to the reasonableness test set out in section 11 of the Unfair Contract Terms Act 1977 (UCTA)?

Judgment

The Supreme Court unanimously dismissed the appeal. In the leading judgment, Lord Leggatt determined that while Clause 5(b) was drafted as a non-reliance clause to create a contractual estoppel, its effect was to exclude liability for misrepresentation. As such, it fell squarely within the scope of section 3 of the Misrepresentation Act 1967 and was therefore subject to the UCTA reasonableness test.

The Reasonableness Test

The court’s analysis of reasonableness focused on the circumstances at the time the contract was made. Lord Leggatt emphasised several factors:

• Inequality of Bargaining Power: The court noted the significant disparity in knowledge and expertise between Ms Brown, a seasoned collector, and Mr Ridley, an enthusiast. This created an imbalance that the clause exploited.
• Nature of the Representations: The seller’s representations were specific, factual, and persuasive, and were intended to be relied upon. They directly contradicted the spirit of the generic, boilerplate non-reliance clause.
• Impracticality of Inspection: For a unique, high-value vintage vehicle, a sufficiently thorough pre-purchase inspection to uncover the hidden defects would have been unusually costly and difficult to arrange, particularly where the seller had offered specific assurances.

The court concluded that it was not fair or reasonable to allow a party to make specific, positive assertions to induce a contract and then rely on a standard-form clause to deny any responsibility for the truth of those statements.

The Unfair Contract Terms Act 1977, particularly when read with section 3 of the Misrepresentation Act 1967, serves as a vital legislative check on the freedom of contract. It ensures that contractual terms which attempt to retrospectively alter reality or exclude liability for inducing statements are subject to the discipline of reasonableness. A ‘non-reliance’ clause cannot be a magic wand that makes untruths vanish.

The judgment stressed the importance of substance over form, finding that the clause’s purpose was to exclude liability, regardless of its label.

In circumstances such as these, where specific representations as to the ‘excellent original condition’ of a unique heritage item are made by a knowledgeable seller to a less-expert buyer, it is manifestly unreasonable to permit the seller to retreat behind a general contractual shield. The clause sought to nullify the very assurances which induced the contract.

Implications

The decision reinforces the judiciary’s protective stance against the use of non-reliance clauses to evade liability for misrepresentation, especially where there is an inequality of knowledge between the parties. It confirms that such clauses will be rigorously scrutinised under the UCTA reasonableness test. The judgment serves as a significant warning to sellers that they cannot make targeted factual claims to secure a sale and then disclaim responsibility through boilerplate language. The ruling champions a holistic assessment of ‘reasonableness’, ensuring that contractual fairness prevails over procedural formality.

Verdict: The appeal was dismissed. The Supreme Court found the non-reliance clause to be unreasonable and upheld the buyer’s right to rescind the contract for misrepresentation.

Source: Brown v Ridley (Rev1) [2025] UKSC 7 (26 February 2025)