Several names are used to describe an ‘Entire Agreement’ clause. It is also known as an integration clause or a merger clause. So what is it? This clause essentially attempts to define the parameters of an agreement. It is a declaration that the agreement, to which both parties are signatories, represents the entirety of the agreement.
The wording of this clause depends, to an extent, on the particular contract lawyer, although it is commonly expressed in the following way:
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.
What Is The Purpose Of An ‘Entire Agreement’ Clause?
When negotiating contracts with clients or suppliers, certain informal correspondence will take place, such as phone conversations, email threads and meetings. After this, the lawyers will negotiate the finer details of the Agreement before each party signs the dotted line agreeing to be bound by the terms of the Agreement.
This contract might be quite distinct from the initial agreement, or the details of the conversations you and the other party have had in the past. As a result, an ‘Entire Agreement’ clause removes any doubt as to the terms of the contract and eliminates the possibility of either party relying on previous representations when enforcing the contract.
By having your business lawyer draft into the contract an ‘Entire Agreement’ clause, it makes certain the terms of the Agreement. The idea is to eliminate any chance of misunderstanding in the future.
When Is An ‘Entire Agreement’ Clause Useful?
Almost always: if previous representations have been made to either party, such as initial proposals and offerings that differ to the finalised terms of the Agreement, have your business lawyer draft this clause into the Agreement.
What Are The Risks Of An ‘Entire Agreement’ Clause?
Without the benefit of an ‘Entire Agreement’ clause, the other party is able to rely on previous correspondence and say that those representations also form part of the contract. For instance, the email thread may detail additional services that might apply to the work, which were not included in the final version.
It is important to note that, even with an ‘Entire Agreement’ clause, the terms of the contract can be modified after the final contract is signed. Discussions that come after the signing of the contract can still be relied on by either party, which is controlled by a ‘Variation’ clause.
If you’re unsure about how to draft an entire agreement clause, contact LegalVision on 1300 544 755. Our team of experienced contract lawyers are ready to help you with all your contracting needs. By including this clause, you are eliminating any risk that previous representations will form part of a contract between you and another party.