Entire contract clause
A clause in a contract which states that the document as executed by the relevant parties constitutes the entirety of their agreements. It is common for commercial contracts to include entire contract clauses as part of the standard boilerplate clauses. Entire contract clauses are often disputed, and depending on the objective of a party in a matter, they may seek to enforce or evade an entire contract clause.
Entire contract clauses can be seen as a logical extension to the parol evidence rule, which operates to exclude extrinsic evidence being used to interpret a contract. However, there are exceptions to the parol evidence rule, and the inclusion of a successfully operating entire contract clause therefore protects a complete and whole contract from misinterpretation.
The specific reasons a contract may include an entire contract clause include:
- Excluding alleged express terms contained outside of the primary document
- Precluding implied terms
- Estop parties from claiming it was induced by a misrepresentation
- Establish the mutual agreement by parties that ‘factual context’ should not be used for interpretation of the contract
- Invalidate previous agreements or collateral contracts
The actual legal effect of an entire contract clause will depend on its construction, the context of the agreement, and sometimes, the determination of outstanding legal principles. As such, they cannot be unequivocally relied on, as the court retains its discretion in determining the scope of such clauses. Where an entire contract clause is not upheld, the parol evidence rule and/or its exceptions will be engaged to govern the interpretation of the contract.