Entire Agreement Clauses (EAC) state that a document constitutes the whole agreement between the parties. It is also known as an integration clause or a merger clause. They often appear in disputes between parties concerning a contract. It is imperative that both parties have full understanding of the EAC as they may become crucial evidence in court proceedings. Follow this article to learn everything you need to know about EACs.
What does it look like?
The clause solely attempts to define the parameters of an agreement. When signed, it is a declaration that the agreement represents the entirety of the agreement. Entire Agreement Clauses will usually have similar wording to the below.
This agreement is the entire agreement between the parties in relation to the subject matter and replaces all previous representations or proposals not contained in this agreement.
Of course, the extract phrasing will differ depending on the lawyer, however the general concept will be the same. They are a very important part of a contract, hence they are present in the majority.
Purpose
When negotiating contracts with clients, lawyers will arrange the finer details of the agreement. This is done prior to each party signing the document, agreeing to be contractually bound by the specified terms. Through the negotiation process, the terms of the initial agreement will evolve. As a result, an Entire Agreement Clause is used to clarify that the document constitutes the whole agreement between both parties. Its purpose is to remove any doubt and possibility of misunderstanding surrounding the terms of the agreement. Moreover, it will limit a party’s liability for misrepresentation. It will also eliminate the possibility of either party relying on previous representations when enforcing the contract.
What are the Benefits?
An Entire Agreement Clause ensures that there is clarity between both parties of an agreement. Without an EAC, the other party can rely on previous correspondence, usually informally communicated, to say that existing representations also form part of the contract. An example can include an email thread. The informal email chain may include details of additional conditions that the final version did not include. Additionally, an EAC can eliminate the issue of misrepresentation between the parties.
What are the Risks?
As with anything, an Entire Agreement Clause can have its own set of risks attached to its use. Firstly, an EAC does not prevent certain terms being implied into a contract. Whilst the EAC can outline that the document represents an agreement of both parties on the expressed terms, it does not cover those that are implied. Secondly, even with an EAC, the terms of a contract can be modified after the final contract is signed. Therefore, any discussions that occur after the signing of the contract can still be relied on by either party.
In conclusion, Entire Agreement Clauses are imperative to any contract or agreement. If you have any further questions or are considering entering into a contractual relationship with another party, it is a recommend to get in contact with a contract lawyer today.
