What is an integration clause? Before you start thinking it has something to do with affirmative action, let’s set the record straight. Integration clauses typically are included at the end of most contracts and provide, in express terms, that the written contract represents the entire agreement between the parties and that there are no other agreements, written or oral, outside of the written document. By including an integration clause in a contract, the parties are expressing their intention that the contract contains all of the terms of their deal and there are no “side deals” or terms missing from the document.
What is the purpose of an integration clause? The main purpose is to prevent the parties from later claiming that they had an agreement which was different from their written document. Courts will rarely look beyond the words of a written contract to determine the meaning intended by the parties. If a written contract containing an integration clause provides for the purchase of ten tons of scrap metal at $100 per ton, the purchaser claiming that the seller verbally promised him a 20% discount would be without recourse. Any such discount would be expected to be contained in the written agreement; the integration clause prevents the parties (and the court) from looking beyond the written contract for additional terms.
There are exceptions to integration clauses in rare cases. One is where it can be shown that the parties each labored under a mistaken impression when they entered into the contract. This is known as a mutual mistake. Another exception would be where it could be shown that one of the parties to the contract has committed fraud in connection with the making of the contract. In these cases, facts and circumstances outside the “four corners” of the written document can be introduced to explain its meaning.
What is the purpose of an integration clause? The main purpose is to prevent the parties from later claiming that they had an agreement which was different from their written document. Courts will rarely look beyond the words of a written contract to determine the meaning intended by the parties. If a written contract containing an integration clause provides for the purchase of ten tons of scrap metal at $100 per ton, the purchaser claiming that the seller verbally promised him a 20% discount would be without recourse. Any such discount would be expected to be contained in the written agreement; the integration clause prevents the parties (and the court) from looking beyond the written contract for additional terms.
There are exceptions to integration clauses in rare cases. One is where it can be shown that the parties each labored under a mistaken impression when they entered into the contract. This is known as a mutual mistake. Another exception would be where it could be shown that one of the parties to the contract has committed fraud in connection with the making of the contract. In these cases, facts and circumstances outside the “four corners” of the written document can be introduced to explain its meaning.
– Mike Malin