What is an Entire Agreement Clause and How Does it Affect My Contract?

An “entire agreement” clause is a provision in a contract that ensures the document represents the complete and final agreement between the parties. It states that any prior agreements, discussions, or understandings not included in the contract are not legally binding. This clause prevents parties from later claiming that there were additional, unwritten terms or representations. Essentially, it helps provide clarity and certainty by confirming that only the terms written in the contract are enforceable.

However, if a party is entering into a contract with no legal advice and without any review by a lawyer, an entire agreement clause can sometimes disadvantage a party by preventing them from relying on promises or representations made outside of the contract. Here are a few examples:

1. Verbal Assurances Not Included in the Contract: If a salesperson makes specific verbal promises about a product or service that were important to the buyer, but these promises don’t appear in the written contract, the buyer can’t enforce them later due to the entire agreement clause. For example, if a realtor verbally promises that certain repairs will be made before a house sale but this isn’t in the contract, the buyer can’t hold the seller to those repairs.
2. Pre-Contractual Negotiations: Sometimes, parties negotiate favorable terms that ultimately aren’t reflected in the final contract. If a party relies on these initial promises but fails to confirm they’re in the final document, the entire agreement clause blocks them from enforcing those terms. For instance, if a company promised an employee specific bonuses or benefits during hiring discussions, these won’t hold if not included in the employment contract.
3. Side Agreements: When parties informally agree on supplementary terms (such as flexible payment plans, delivery times, or post-contract support) outside the main contract, these can’t be enforced later if they weren’t written into the contract. A supplier might verbally agree to extend payment terms during a tough period for a small business, but if this isn’t in writing, the entire agreement clause can prevent the small business from claiming this flexibility.
4. Reliance on Misrepresentations: If one party makes false statements or misrepresents key facts to induce the other into the contract, but the entire agreement clause excludes reliance on prior statements, it can be challenging to claim damages. In certain jurisdictions, this clause may bar the misled party from seeking recourse based on the pre-contract misrepresentations unless they can prove fraudulent intent.

In these cases, an entire agreement clause can limit a party’s ability to enforce key terms, making it essential to ensure all agreed-upon terms are fully captured in the written contract. You may be successful in obtaining a court order that a term or representation should be read into the agreement, but this will be far more expensive than hiring a lawyer to ensure that such term is captured in the written contract.

This blog post provides legal information but is not a substitute for legal advice. If you have a question about this topic or another legal matter, contact Naz Khodarahmi for a complimentary consultation. You can book a consult through www.macushlaw.ca through our booking system or contact Naz at [email protected] or (236) 476-3188.