Guidance

The Entire Agreement Clause and Common Law: Integrated Agreements

An Entire Agreement clause works in concert with the common law rules regarding complete agreements, or "integrated agreements."

As defined in the Restatement (Second) of Contracts § 209, an integrated agreement is the parties’ final intended expression of the terms of their agreement. United States contract law is founded on the parties’ freedom to contract, and in general courts respect the parties’ intentions as to what they include in their agreements.

Therefore, a threshold issue for a court hearing a contract dispute is to define what terms the parties intended to include in their agreement, to define the terms of the integrated agreement, these are the terms that bind the parties with certain duties or responsibilities.

The court ultimately decides whether an agreement is integrated.

This is where an Entire Agreement clause becomes important. An Entire Agreement clause is meant to make it clear to the court that the parties intend the agreement to be the final expression of their intent, or integrated and complete. An Entire Agreement clause is persuasive evidence of an integrated agreement, but it is not dispositive; including an Entire Agreement clause does not require a court to find an agreement is integrated.

Significance of Integration: The Parol Evidence Rule

The Parol Evidence Rule states that when the parties have come to a complete and final agreement— that is, when an agreement is integrated—the terms of the agreement cannot be modified or contradicted by any prior agreements, unless there has been fraud, duress, or mutual mistake.

Town Bank v. City Real Estate Dev., 793 N.W.2d 476, 484 (Wis. 2010).

In other words, an integrated agreement severely limits whether the parties can add to or contradict the terms of the agreement by introducing additional evidence, documents, or other agreements between the parties.

There are two degrees of integration: partial and complete. Depending on the degree of integration, some additional evidence may be admitted to supplement or even contradict terms of the agreement.

    • Partial Integration — When an agreement is Partially Integrated, no evidence of prior or contemporaneous agreements, written or oral, may be admitted that contradict a term of the agreement. Here, terms that are consistent with the agreement and that supplement rather than contradict can be admitted.
    • Full Integration —When an agreement is Fully Integrated, no evidence of prior or contemporaneous negotiations may be admitted which would either contradict or supplement the writing.

For more information on the effect of integrated agreements, see The Restatement (Second) of Contracts  §209–216.

Evidence Establishing Integration: While courts will not admit additional documents, agreements, or other evidence once an agreement is integrated, these documents, agreements, and other evidence can—and should—be used to determine the threshold issue of whether an agreement is integrated to begin with.

Fraud and Duress: There is one important carve-out for when courts will admit evidence it otherwise would not for an already integrated agreement. Courts will always accept evidence of fraud, duress, or other misconduct that forced one party to accept the agreement, or certain terms of the agreement. If the court finds fraud or duress, it can hold agreement, or certain terms, unenforceable and void.

Special Trade Usage and Prior Dealings: Finally, both partially and fully integrated agreements should be read in light of the surrounding facts and circumstances of the parties and of whatever trade or industry the agreement might related to. Therefore for both partially and fully integrated agreements, either party can introduce evidence of special trade language common to the applicable industry or trade of the agreement, and of the course of dealing and of performance between the parties.

How Courts Determine When An Agreement is Complete or Integrated

Courts only need to determine whether an agreement is complete and integrated if there is ambiguity regarding the agreement or particular terms, or when there is disagreement or dispute between parties. In other words, the language of the contract is the best evidence of the parties’ intent; when there is clear, unambiguous language signalling the parties’ intent courts respect that.

Town Bank v. City Real Estate Dev., 793 N.W.2d 476, 484 (Wis. 2010).

When there are ambiguities and disagreement as to the parties’ intent, courts will look for any signs of intent, from the surrounding facts and circumstances of the agreement, related conduct by and between the parties, and any previous and concurrent agreements between the parties.

This leaves courts with wide discretion to determine parties’ intent, so all efforts should be made to avoid ambiguity.

How an Entire Agreement Clause Factors into a Court’s Determination

An Entire Agreement clause is an explicit manifestation of parties’ intent that the agreement is final, complete, and integrated. Therefore, it makes sense that an Entire Agreement clause is strong, persuasive evidence to the court that the agreement is integrated. Including an Entire Agreement clause greatly increases the likelihood the court will find your agreement is integrated.

However, the Restatement (Second) of Contracts reminds us that an agreement, or any form of writing, “cannot prove its own existences.” An entire agreement clause is relevant evidence, and strong evidence, for courts to consider, but it is not conclusive.

About

  • Clause Taxonomy: Entire Agreement
  • Organization: Public
  • Updated: 01/23/2018
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Overview

The Entire Agreement or Integration clause helps define the scope of the agreement. The Entire Agreement clause indicates to courts the parties' intent that what is defined as the Agreement represents the complete, entire, or "Fully Integrated," agreement.

Integration is a term of art in contract law. A fully integrated agreement, unlike a non-integrated, or a partially-integrated agreement, supersedes any earlier agreements, whether oral or written, between the parties, and for the most part, a fully integrated agreement cannot be supplemented by additional terms.

For more on the use of the Entire Agreement clause, see the Discussion below.