Entire agreement clause – Boilerplate clause? Yes. To be overlooked? No.
Lawyers which are commonly involved in negotiating or administering bespoke contracts will most likely cross paths with an entire or "whole" agreement clause in the "miscellaneous" section of a contract. Entire agreement clauses are often overlooked by legal practitioners as a mere boilerplate provision, but this is not a very wise move, as these clauses have been the subject of many contract disputes. Therefore, an entire agreement clause should always be carefully considered and, in most cases, adjusted to account for the specific circumstances of each commercial agreement.
An “entire agreement” or “whole agreement” clause is there to define the scope of the agreement between the parties. The exact drafting of such clause varies from contract to contract. It can be narrower or broader depending on the pre-contractual arrangements and to what extent such arrangements are intended to survive the execution of the contract. However, in its pure form, an entire agreement clause will generally provide that the written contract in which it has been included constitutes the entire agreement between the parties to it in respect of its subject matter and that the contract overrides any written and oral statements, representations and agreements made prior to the date of the contract in respect of the same subject matter. The primary goal is to restrict the terms of the arrangement to those included into the contract itself and thereby avoid disputes and claims relating to statements and representations as well as any other contractual arrangements made prior to the date of the contract.
An entire agreement clause obviously provides certainty to the parties and is particularly useful for large-scale deals which tend to have lengthy pre-contractual periods involving the exchange of vast amounts of information and protracted negotiations. On such instance, an entire agreement clause provides comfort to the party seeking to rely on it that they will not be exposed to liability for claims brought by the other party for pre-contractual statements and representations.
However, there are some key aspects one should always have in mind when opting to include in the contract an entire agreement clause:
Enforceability: Clauses of this nature are treated as exemption clauses (as they could potentially deny a party an important remedy it may otherwise have had at law) and are thus subject to the reasonableness test pursuant to section 3 of the Misrepresentation Act 1967. Further, case law¹ has established that a standard entire agreement clause is not enough to preclude a claim for misrepresentation and that express and clear drafting should be included if the parties intend to exclude liability for misrepresentation. To that effect, what we commonly see in contracts is (a) an acknowledgement by the parties that they have not relied on any express or implied representation, warranty, promise etc. (other than those contained in the contract); and (b) a waiver of all rights and remedies which might have been available for such express or implied representation, warranty, promise etc. However, one should note that, even with such express drafting in place, it is not possible to exclude liability for fraud or fraudulent misrepresentation.
Pre-contractual arrangements: If the parties have entered into any pre-contractual arrangements (such as an early work services agreement or pre-contractual fee letters or a non-disclosure agreement) which are intended to survive the execution of the contract, it is important that these arrangements are excluded from the scope of the clause.
Exclusion of implied terms: Where the contract is comprehensive, parties may wish to exclude 'implied terms' to ensure that the parties' arrangement is confined to the contract itself. These may be terms implied by statute or required to give business efficacy to the contract. The exclusion of implied terms may work, but this is not certain, and it will largely depend on the circumstances. For instance, it is expected that in shorter-form contracts, such an exclusion would require greater consideration. In addition, there are of course certain implied terms which cannot, by operation of law, be excluded.
