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COMMERCIAL CONTRACT VOCABULARY A - Z: E - ENTIRE AGREEMENT CLAUSES

An ‘entire agreement clause’ in a contract seeks to limit the terms of a contract to the ones that are expressly set out in the contract itself. Its purpose is to prevent either party to the contract, in future, from relying on any other statements, representations, warranties, etc – whether made orally or in writing - which are not written expressly into the contract from having contractual force. Entire agreement clauses are also sometimes referred to as:


· Whole agreement clauses

· Merger clauses

· Integration clauses.



Commentary

Before we begin, try the following vocabulary exercise.


Exercise 1

Match the following verbs with their meanings


constitute supersede extinguish


(a) to put an end to something or make them invalid

(b) to be or be equivalent to something, or to represent something

(c) to replace something in authority or power, or to replace something with something else.

[The answers are in the Answer Key at the end of this post]


Entire agreements clauses are very common in commercial contracts. They are generally regarded as ‘general’ or ‘miscellaneous’ provisions in a commercial contract, which are often called ‘boilerplate provisions’. [1] However, as we shall see in this post, these importance of boilerplate provisions such as entire agreement clauses should not be underestimated. They must be drafted with the utmost care, if they are to have the legal effect the parties intend.

The following is an example of an entire agreement clause. It is a clause from a commercial contract – a share purchase agreement. In fact, the clause was the focus of litigation in an English civil case in 2018.


'This agreement (together with the documents referred to in it) constitutes the entire agreement between the parties and supersedes and extinguishes all previous discussions, correspondence, negotiations, drafts, agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter'.


The purpose of this kind of clause was explained by Mr Justice Lightman (Lightman J) in an English case in 2000, called Inntrepreneur Pub Company Ltd v East Crown Limited [2]. It is essentially to preclude the parties from looking through a mass of documents, emails, notes, or even recollection of conversations, in order to found a claim if a dispute arises. It is basically trying to say that the written contract itself is the document that contains the entire contract, as agreed, with its full contractual terms included in it.


However, as with most other boilerplate clauses, they must be drafted with extreme care. In recent years, English courts have been willing to look behind entire agreement clauses and interpret them quite widely in certain circumstances.


For example, many entire agreement clauses seek to preclude claims for misrepresentation [3]. However, the court in the Inntrepreneur case held that entire agreement clauses do not necessarily preclude a claim in misrepresentation. This is the case, even if the entire agreement clause expressly refers to representations, unless there are very clear words to this effect: AXA Sun Life Services plc v Campbell Martin Ltd [2011] [4].


In this context, it is important not to see entire agreement clauses – or indeed any boilerplate provision – as less important than any other provision in the contract. It is also important to look at how other contractual provisions link with them and can assist in achieving what the parties want to achieve. For example, in relation to representations, the parties might seek to do this by the incorporation of an express ‘no representation clause’, or a ‘basis clause’, which may produce a contractual estoppel (an interesting area of contract law which has generated some very interesting cases in recent years, in particular in the context of whether they amount to ‘exclusion clauses’ or not).


The sample entire agreement clause we looked at earlier was the subject of litigation in 2018, in a case called NF Football Investments Ltd v NFCC Group Holdings Ltd [5]. In that case, the court reiterated that “…an exclusion of the liability for misrepresentation must be clearly stated” and that such legal effects are usually created by an express ‘no representation’ clause [at paragraph 25]. The court also stressed that “The effect and meaning of a particular clause in a contract must always be a matter of the construction of the clause set in its particular context.” [paragraph 27]. In this particular case, the court held that the wording of the entire agreement clause was sufficient to exclude claims in misrepresentation (including statutory misrepresentation) and that it expressed fully the intention of the parties to do so.


It should also be noted that entire agreement clauses will not prevent terms being implied into the contract, where it is appropriate to do so (except those relating to trade custom, where the clause is drafted expressly with that intention.


The main takeaway here is that entire agreement clauses must not be regarded as ‘standard’ clauses but must be carefully drafted to express the intention of the parties.


Text Notes:

[1] If you want to learn more about boilerplate provisions, see our post here:

https://www.cambridgelegalenglish.com/post/commercial-contract-vocabulary-a-z-b-boilerplate-clauses

[2] [2000] 2 Lloyd’s Rep 611

[3] Basically, a misrepresentation is a false statement of fact or law which has induced the party to whom the representation was made to enter into a contract because of it.

[4] [2011] EWCA Civ 133

[5] [2018] EWHC 1346



Exercise 2

Answer the following questions.

1. General, or ‘miscellaneous’ provisions in commercial contracts are sometimes called

(a) template provisions

(b) boiler provisions

(c) boilerplate provisions


2. Do you know two alternative names for an entire agreement clause?


3. In the commentary, there are a number of words in bold. Which of the words in bold mean the following:


(a) ruled or decided by a court

(b) to prevent or stop something from happening

(c) said something again for emphasis

(d) believed something was less important than it really is

(e) required by an Act of Parliament

(f) the state of being legally responsible for something

(g) the process of taking legal action



ANSWER KEY


Exercise 1

constitute - (b) to be or be equivalent to something, or to represent something

supersede - (c) to replace something in authority or power, or to replace something with something else.

extinguish - (a) to put an end to something or make it invalid




Exercise 2


1. (c) boilerplate provisions


2. Whole agreement clauses, Merger clauses, Integration clauses.


3. (a) – held

(b) – precluded

(c) - reiterated

(d) - underestimated

(e) - statutory

(f) - liability

(g) - litigation


Note: The material in this post is for study and educational purposes only. It should not be relied upon for legal advice or guidance. If you need legal advice and guidance, you should consult an appropriate lawyer.


© Cambridge Legal English Academy 2021


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