Whole Agreement Clause

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We have seen that the interpretation of the entire contractual clause arises when the parties have concluded several agreements and there are contradictions in the clauses of the last agreement and the previous agreement and the last agreement can replace the previous agreement on the basis of the entire contractual clause, even if the parties may not have foreseen/foreseen such a scenario. In the case of start-ups, for example, the founders of a start-up conclude a start-up contract and then conclude a shareholders` agreement with the investor. Often, the shareholders` agreement and the start-up agreement cover the same subject, namely restrictions on the transfer of shares, governance and management, exit clauses, etc., and sometimes the two agreements have contradictory provisions. In such a situation, the shareholders` agreement may replace the founder`s contract on the basis of the entire contractual clause, which sometimes also affects the rights and obligations of the founders among themselves. Therefore, in this article we want to analyze the effectiveness and limits of the entire contractual clause and offer formulation tips to safeguard the interests of the contracting parties. Under a Purchase Agreement (SPA), two buyers acquired all the shares of Nottingham Forest Football Club (the Club). The SPA contained a complete contractual clause as follows: “This Agreement (together with the documents referred to therein) constitutes the entire agreement between the parties and supersedes and deletes all prior discussions, correspondence, negotiations, drafts, agreements, promises, representations, warranties, representations and understandings between them, whether written or oral, with respect to their subject matter.” The buyers filed a lawsuit for misrepresentation on the grounds that the club`s responsibilities were incorrectly stated in the pre-contractual documentation. The buyers claimed to have relied on these statements when the SPA closed. The seller contested the claim and relied on the entire contractual clause as part of its arguments. This clause, if interpreted in the context of the entire contract (and in particular the contractual procedure agreed to deal with false statements about the extent of the club`s liability), predestined any legal claim for misrepresentation. The buyer, who relied on AXA Sun Life, argued otherwise. Claims for misrepresentation were not expressly excluded by the clause. Consequently, the clause excluded only insurance of a contractual nature made before the execution of the SPA.

Such a clause constitutes a binding agreement between the parties that the full terms of the contract can be found in the document containing the clause and not elsewhere, and that, therefore, any commitments or assurances made during the negotiations (which could be effective as ancillary collateral without such a clause) do not have the force of contract, provided that they are reflected and effective in this document. Many forms of contracts, especially commercial contracts, tend to contain a variety of so-called “boilerline” clauses (i.e. clauses with standard formulations that are commonly used). One type of one-way clause that is often included in contracts – and often plays an important role in negotiating contracts that have gone wrong – is the “entire agreement” clause […].