Each of these issues is typically found in the boilerplate at the end of a contract. Business owners who negotiate their contracts without legal counsel typically gloss over these provisions because they are unrelated to the business terms of the deal. They do so at their own peril.
Entire Agreement. The integration or merger clause–also known as the entire agreement clause–affirmatively states that the written terms of the contract being executed represents the entire agreement between the parties on its subject matter. This clause provides certainty that the version of the contract signed by the parties includes everything term of the agreement. Therefore, a signatory is barred from claiming prior negotiations, agreements, representations, emails, or discussions are part of the final agreement.
All that said, attorneys litigating this issue have won a couple of cases. Those are the exception to the rule. You must assume this language is the final word on the issue.
Amendment. This clause typically provides that any contract amendments must be in writing and signed by both parties. This is intended to prevent a party from later claiming that a verbal change or one email to another party was made to amend the contract after its execution. Further, some agreements require an officer of each company execute any amendment to be enforceable.
No Waiver. Waiver clauses in a commercial contract are often inserted to prevent an assumption arising that a party that does not act “quickly” to enforce rights under a contract (for example, the right to sue for damages for breach), has implicitly waived those rights under the agreement and, thus, forfeited them. Despite the common use of such clauses the case law reveals that the concept of waiver is complex.
A waiver clause is not a foolproof method for protecting a party’s rights under an agreement, as waiver clauses have traditionally been narrowly interpreted by the courts. Clear words or conduct can result in a conclusion that certain rights have been waived or that compliance with a waiver clause itself is not necessary. Remember: waiver clauses provide an indication as to the parties’ intentions but are not a substitute for evidence of those intentions.
Incorporation. Incorporation clauses reference other documents or agreements, which are then made a part of the contract. In other words, the terms and conditions of the referenced document are incorporated into the contract by reference to that contract. The purpose of the incorporation clause is to avoid the need to repeat the same information in multiple documents and to ensure that all parties are aware of the terms and conditions of the referenced document. One common way of incorporating the terms of another agreement is
Of course, this means that you or your attorney must read the referenced document. Not doing so is gross negligence at best.
David Seidman is the principal and founder of Seidman Law Group, LLC. He serves as outside general counsel for companies, which requires him to consider a diverse range of corporate, dispute resolution and avoidance, contract drafting and negotiation, and other issues. In particular, he has a significant amount of experience in hospitality law by representing third party management companies, owners, and developers.
He can be reached at david@seidmanlawgroup.com or 312-399-7390.
This blog post is not legal advice. Please consult an experienced attorney to assist with your legal issues.
