What Is An Integration Clause - And Why Should I Care?
Many written contracts include a short paragraph usually entitled "Entire Agreement" or "Integration Clause" that has legal ramifications that the parties should understand.
Over the many years I have practiced law in California, I have dealt with a wide array of disputes involving written contracts. In some instances, my clients’ have asserted that prior to signing a written contract (whether it was a business contract, real estate contract, construction contract etc.) they and the other contracting party had both orally negotiated and agreed that certain terms were to be included in the written contract. However, as is sometimes the case, after the written contract was prepared (either by an attorney for one of the parties, or by using a generic form such as an AIA construction contract or California Association of Realtors form) the parties fail to closely review the written contract to ensure that all bargained for terms were included, before they both signed the contract.
In some instances, as performance of the contract ensues, a dispute later arises between the parties when one of the parties contends that the other party failed to perform a condition and/or term that they had earlier “orally” agreed to perform. If the parties are unable to informally resolve the contract dispute, it may lead to litigation and a detailed legal analysis (by an attorney) of what rights a party has to enforce “oral” terms that were intentionally or inadvertently omitted from the final written contract.
Many written contracts (drafted by attorneys or included in some of the form contracts referenced above) include a short paragraph usually entitled “Entire Agreement” or “Integration Clause.” Although brief in nature, this paragraph has huge implications to both contracting parties, especially if one of the parties is attempting to enforce a term that was orally agreed to between the parties, but omitted from the final contact. Integration clauses generally read as follows:
All understandings between the parties are incorporated in this Agreement. Its terms are intended by the parties as a final, complete and exclusive expression of their Agreement with respect to its subject matter and supersede and replace all prior or contemporaneous discussions, negotiations, letters, memoranda or other communications, oral or written, with respect to the subject matter hereof and may not be contradicted by evidence of any prior agreement (either written or oral).
Integration clauses are strictly enforced by courts in the State of California. Although some exceptions may exist to enable a party to enforce an oral term that was omitted from the final contract, the party seeking to enforce such a term faces an uphill and very difficult battle. The exceptions to this rule are rare, and parties should immediately contact legal counsel to determine if such an exception may apply in their case. Consequently, a party signing a written contract involving a substantial financial commitment or a significant legal obligation, should closely review the contract and may wish to retain legal counsel to review the contract and ensure it includes all essential terms before the contract is signed.
The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Reid & Hellyer, APC or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.