Entire agreement clause

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A clause designed to buttress the time-honoured parol evidence rule, that if it is clear you meant to entirely reduce your agreement to writing, once you have done so the agreement, and no other extraneous evidence, will be the tribunal’s only guide to divining its intention. Reduces a certain amount of uncertainty, certainly, but at what cost?

Also a favourite “in your face” move of the kind of pedant you will inevitably encounter in a derivatives negotiation. Some lesser spotted legal eagles, apparently struggling with the basic essence of the idea, have even inserted entire agreement clauses into arrangements which are patently nothing of the sort — amendment agreements and side letters, for example — and these, by following ineluctable gravity down a path in whose adjoining ditches and upon whose surrounding hills lie the remains of no men or women who were prepared to die in or on them, they have ossified into standard boilerplate.

But an entire agreement It suggests the learned counsel have understood every commercial nuance and forensic contingency, even if their clients have not. If also presumes that, having done so, between them they will have successfully memorialised those terms in a prose that speaks with utmost clarity to the commercial bargain. The JC knows a lot of lawyers and would urge caution against this assumption. If they have done so — fat chance, but let’s just say — then there is surely nothing to be left to doubt, the parties will be happy, there will be no dispute, and all will be well in the world. But if the parties find themselves later at gunpoint, it is safe to say the legal agreement has already failed at its avowed intent. To now cast your lot with whatever the legal eagles did confabulate is, it seems to this old codger, to double down on an enterprise you already no to have been regrettable. If it transpires that the merchants own discussions, captured in contemporaneous correspondence, suggests a different agreement, then wouldn’t that, rather than the post facto perorations of their advisers, be a better judge of a fair resolution?

It also creates a Möbius loop. For either your written agreement, on its face, by its own terms and within the parties’ shared expectation, is the final definitive record of your whole agreement “on the subject matter it purports to address” — now there’s some wieselspiele for the times — in which case, your statement to that effect is not needed, or (as the Court of Appeal found in Hipwell v Szurek [2018] EWCA(Civ) 674 it is not, in which case the wording won’t save you. If something that goes without saying, indeed, went without saying, an entire agreement clause won’t stop it, as it were, still going. Nothing you can write in the agreement will change that.

What it really means

Since the bracing authority of Rock Advertising Limited v MWB Business Exchange Centres Limited it seems to this old fellow, that everything of merit an entire agreement clause sets out to do, is covered in hindsight by the parol evidence rule, and in prospect by a “no oral modification” clause.

What’s in the box

A “classic” entire agreement clause contains the following components of flannelry:

• A statement that the document (and, ahh, ancillary documents it refers to, their schedules, annexes, side letters and any other appended napkins, used envelopes or scraps of paper — you can see the unfolding problem here right?), represents the totality of the bargain.
• A disclaimer of all prior representations, intimations and innuendos that might otherwise have induced entry into the contract.
• An exclusion of liability for any such misrepresentations, innuendos etc (for the sort of chicken licken that might not trust its own disclaimer, for the avoidance of doubt.
• If you are really minded to go to town, a restriction limiting a party's remedies for misrepresentations — which you have just comprehensively disclaimed, remember — to contractual remedies only.
• A final, emotional concession, to prove that your heart is not entirely made of stone, allowing that this clause won’t excuse your outright fraud. Not, of course, that any contractual term could immunise a party who seeks to rely on it from its own fraud.

Tricks for les joueurs jeunes

• Would an entire agreement clause prevent a court implying terms to give a contract business efficacy? No, said the Court of Appeal, rejecting the fatuous claim of a landlord in Hipwell v Szurek that an entire agreement clause in a lease contract that didn’t mention electrical wiring meant it wasn’t responsible for the maintenance and repair of the wiring, which proceeded to administer the tenant and customers of her cafe periodic electric shocks.

See also

• Good client briefing on the topic from Ashurst here.
• In your face
• Entire Agreement - ISDA Master Agreement
• Entire agreement - 2010 GMSLA
• Entire Agreement; Severability - Global Master Repurchase Agreement