Contracts record an agreement between two parties, creating binding obligations that are legally enforceable. Generally, a written contract will describe the whole relationship between contracting parties. However, in some circumstances, documents other than the written contract may affect the commercial agreement. Parties often include an \u2018Entire Agreement clause\u2019 (EA clause) within a contract to avoid confusion and potential disputes. This article will explore what an EA clause is, how your business can use one and the potential issues of a poorly drafted clause. <\/p>\n\n\n\n
Before parties sign a contract, they will often undergo negotiations or send emails back and forth that relate to the final contract. Sometimes, these initial discussions can give rise to legal obligations. To avoid this, contracts will include an EA clause. Effectively, an EA clause means that the written contract reflects the entire agreement between the parties. As such, only the terms in the contract form the subject matter of the agreement. Thus, in any future legal dispute, your company can exclude any comments made outside the contractual agreement. <\/p>\n\n\n\n
In a dispute, parties may claim that discussions outside the contract also impact the agreement. Such assertions can undermine the terms of the contract and disadvantage your business. However, if you have an EA clause, you can argue that the parties agreed at the outset that other documents and comments would not affect the agreement. <\/p>\n\n\n\n
Another scenario may be that a verbal agreement was made before signing the contract and was accidentally excluded from the final written agreement. Again, your company could argue that the EA clause ensures that any excluded terms cannot form part of the agreement. <\/p>\n\n\n\n
A party could try and argue that verbal and written comments form part of the contract, including:<\/p>\n\n\n\n
Without an EA clause, the other party may have a greater chance of persuading a court that these communications or documents also formed part of the agreement.<\/p>\n\n\n\n