Entire Agreement Clause And Due Diligence Cannot Oust Fraudulent Misrepresentation

The defence of misrepresentation is still alive in circumstances involving entire agreement clauses and opportunities for due diligence, the Ontario Court of Appeal recently held in 10443204 Canada Inc. v 2701835 Ontario Inc., 2022 ONCA 745. In setting aside a summary judgment decision, the Court of Appeal confirmed that the existence of an entire agreement clause and opportunities to discover the truth cannot preclude a party from raising fraudulent misrepresentation to answer an alleged breach of contract, even when there is no inequality of bargaining power.

Background and Summary Judgment

The case involved an appeal of a summary judgment ruling, which found the appellant purchasers liable for the outstanding price for the purchase of a coin laundry business. The purchase agreement included an entire agreement clause and was also conditional on certain matters, including a right for the purchasers to attend the business to "verify the income" and terminate