Entire agreement clause
What is an entire agreement clause?
An entire agreement clause, also known as a merger clause or integration clause, is a common provision in contracts that declares the written agreement to be the complete and final understanding between the contracting parties. It says "this document, regardless of any conflicting evidence or discussions leading up to its creation, represents the final terms we have agreed upon and intend to enforce mutually”.
That is important because contracts are essentially a living document that encapsulates the state of a given deal at any time. Positions are constantly held, given up, exchanged and recalibrated as the deal moves towards closure. The final state of the document is what the parties ended up agreeing and supersedes any previous understandings.
Why is an entire agreement clause important?
During contract negotiations, parties may propose various terms and conditions that are ultimately modified or rejected to reach a mutual agreement. An entire agreement clause clarifies that only the terms within the written contract are binding, effectively excluding any prior agreements or understandings not expressly included. This helps prevent disputes over verbal agreements or informal communications that occurred during negotiations.
What are examples of entire agreement clauses?
We’ve researched some examples of entire agreement clauses and like to give credit where credit is due. Maak Law, a Dutch law firm, has extended several examples that we’ve copied below for convenience of the reader.
- “This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations or agreements relating thereto, whether written or oral.”
- “This Agreement, including the exhibits attached hereto, contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements, oral or written, with respect to such matters.”
- “This Agreement represents the entire agreement between the parties and supersedes all prior negotiations, representations or agreements, either written or oral.”
Feel free to read their in-depth article about the entire agreement clause on their website.
What is not governed by the entire agreement clause?
As we’ve explained, the entire agreement clause is largely backward-looking. The final agreement supersedes the state of the agreement at any point before it was signed. But what about prior agreements? What about parallel agreements? And how do you deal with situations arising post-signature?
Let’s start with prior and parallel agreements - they will need to be expressly dealt with in the new agreement. Meaning the scope of their application must be expressly excluded if the new agreement is to take replace the agreements made here. Post-signature, the situation is slightly different. This clause will not prevent a party from bringing a claim for post-contract arrangements.
In all cases, this is where a CLM tool like Docfield can really make a difference for your business. It is critical to maintain legal hygiene and oversight on all agreements and arrangements that you or your business enter into to prevent a scenario where the business loses control of its obligations.
Summary
An entire agreement clause, also known as a merger clause or integration clause, is a contractual provision stating that the written agreement represents the complete and final understanding between the contracting parties. This clause ensures that only the terms within the written contract are binding, superseding any prior agreements or discussions not included. It's important because it prevents disputes over verbal agreements or informal communications that occurred during negotiations, providing clarity and legal certainty.
To maintain legal oversight of all your agreements and prevent potential contractual issues, consider using a CLM tool like Docfield. Speak to a Docfield expert today to learn how we can help transform your contracting.