In your personal and business life you’ve likely read and signed plenty of contracts for yourself or your LLC. Often, these agreements contain boilerplate additional terms that are somewhat standard and used in all types of contracts. While common, they are extremely important – especially the contract integration clause. Understand what is an integration clause in your written agreements and the purpose it serves to protect the intent between contracting parties. Complete with integration clause samples, our guide is your place for help with this key agreement clause.
What Is an Integration Clause in a Contract? Our Definition
Our integration clause definition is this: an important contract term that unequivocally states the agreement is the final and entire representation of the understanding between the parties. Sometimes called a merger clause, it negates the enforceability of prior agreements and negotiations (including oral agreements) between the parties involved.
So, What Is an Integrated Contract?
An integrated contract then is a written contract that contains an enforceable integration clause. They are one of several boilerplate contract terms that you should have in your final agreements, regardless of the subject matter of your deal. Other important miscellaneous terms common in most written agreements may include:
- governing law terms
- choice of venue in case of conflict
- arbitration clause
- severability terms
- future assignment rights
- force majeure
- attorney’s fees and costs
- Florida contract law termination
You can have either a fully integrated or partially integrated contract depending on the nature of the agreement, previous agreements, and other existing factors between the contracting parties.
What Is a Fully Integrated Contract?
A fully integrated contract is one that totally expresses the intent of contracting parties and completely explains their rights and obligations with respect to the entire agreement. Having a fully integrated agreement becomes important during a contract dispute over one or more of the types of breach of contract. When appearing before a court or other tribunal, the clause will limit or negate the application of the parol evidence rule.
The parol evidence rule is a concept in business law that allows courts and arbiters to hear or consider evidence outside of the four corners of the written contract. In other words, you can use evidence other than the written agreement to determine your contracting intent, such as:
- prior oral agreements or testimony
- prior written agreements
- prior drafts of agreements
- negotiations
- industry standards
What Is a Partially Integrated Contract?
A partially integrated contract is one that mostly represents the entire agreement of the parties and supersedes other contracts. However, the final contract does not clearly express the intent of the parties with respect to all terms. This usually happens when the final writing is silent toward material terms of the contract or the contract contains vague or ambiguous language. Partially integrated contracts can create a reason for use of the parol evidence rule and force the parties to turn to evidence outside the contract to reach a consensus on undefined terms.
Why Is an Integration Provision Important?
You are likely to spend a lot of time and money negotiating the terms of a contract between meeting with key stakeholders and getting legal advice from your attorney or law firm during negotiations. To protect that effort, an integration provision is critical for managing the enforceability of the terms of the agreement. We lightly touched on some of these issues above, but the core benefits of an integration provision in your contracts are as follows:
- reduce the chances of conflict about the terms of your agreement
- limit the ability of counterparties to allege oral agreements are binding
- prevent your oral statements or prior contract versions during negotiations from becoming evidence about the intent of your arrangement
- ensure the enforceability of amendments to your prior contracts
Ultimately, the purpose of an integration clause is to protect the essential elements of a contract such as the consideration or meeting of minds between you and your counterparty.
Contract Integration Clause Example
While the precise use of an integration clause requires careful consideration of the contract and applicable law, below you can find a list of sample integration clause examples to help inform your understanding. These clauses often vary in length and complexity based on the relationship with the parties. For example, a contract between parties with multiple arrangements across different industries or contexts may require more complex integration clauses to reconcile and account for this reality (e.g., through the use of cross-references, exceptions to the integration, etc.).
Integration Clause Sample 1: Apeiron Capital Investment Corp. (Underwriting Agreement)
Integration. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company and the Underwriters, or any of them, with respect to the subject matter hereof.
Integration Clause Sample 2: Airlease Corp. (Credit Agreement)
Integration. This Agreement and the other Loan Documents represent the entire agreement of the Borrower, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations, or warranties by the Administrative Agent or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.
Integration Clause Sample 3: Alternative Loan Trust
Integration. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter.
Integration Clause Sample 4: VTTI Energy Partners LP (Contribution, Conveyance, and Assumption Agreement)
Integration. This Agreement and the instruments referenced herein supersede all previous understandings or agreements among the Parties, whether oral or written, with respect to the subject matter of this Agreement and such instruments. This Agreement and such instruments contain the entire understanding of the Parties with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written amendment hereto executed by the parties hereto after the date of this Agreement.
Need Help with Integration Clause Contract Law?
If you frequently enter into contracts or participate regularly in mergers and acquisitions, integration clauses will be an important term in your deals. While these clauses may appear simple, their application and use require a thorough understanding of the deal between the parties and existing business laws (both statutory and in common law). The attorneys at Cueto Law Group offer their service to clients in multiple facets of integration clause usage. We help clients draft these terms and help them understand their related rights and risks. When disagreement exists, we provide representation and counsel to advocate for your interests over the enforceability of an integration provision.
Schedule a consultation with Cueto Law Group today for guidance on your use or enforcement of an integration clause in your contract.
FAQs
Below are some quick answers to other commonly asked questions when it comes to the use of integration clauses in your business contracts.
What Is the Difference Between a Merger and Integration Clause?
Although often used interchangeably, a subtle distinction exists between a merger clause contract and an integration clause. Merger clauses offer a stronger statement about the finality of a contract. In general, a merger clause claims that no other agreements or representations exist between the parties outside the final contract.
