In a contract, an integration clause states that the written contract is the final and complete agreement between the parties, rather than any other written or oral statements. The purpose of an integration clause is to prevent the parties from claiming later on that the contract doesn’t reflect their true and complete understanding of the agreement.
Integration clauses are also called “merger clauses”, or “merger and integration” clauses. The laws governing integration clauses can vary from state to state, but they must be executed with the same formalities as any other contract clause requirement (signed, etc.). Integration clauses typically appear at the beginning or the end of a contract.
Though the exact language may vary with each individual contract, an integration clause may utilize language such as the following:
“This Contract contains the entire agreement of the parties with respect to the subject matter of the Contract. The contract supersedes any prior agreements, understandings, or negotiations, whether written or oral. This Contract can only be amended through a written document formally executed by all parties.”
Some examples of agreements in which integration clauses are commonly used include:
- Employment: An employer and employee may often choose to work according to an employment contract. Many employment contracts contain an integration clause to prevent either party from claiming more or less than what was agreed upon in the writing.
- Sale of Products: Agreements for the sale of products may require much negotiation in terms of pricing, delivery, and other important aspects of the sale. A merger clause may be needed to prevent the parties from changing the terms later on.
Thus, merger and integration clauses provide the parties with clarity regarding those terms that are actually part of the contract. They are particularly useful for situations where the parties engaged in heavy verbal negotiations before signing a written contract.
Violations of an integration clause usually occur where one party is trying to claim that a prior oral statement was the basis of the agreement, rather than the terms contained in the written contract document. In such cases, the presence of an integration clause would require the parties to follow the writing rather than any other prior agreements.
However, if one party refuses to perform under the written contract terms, the other party can usually file a lawsuit in order to obtain the appropriate remedy. In most cases, the court may issue an injunction requiring the other party to perform their contract duties according to the written agreement.
In some cases, the non-breaching party may obtain a monetary damages award as compensation for any losses caused by the non-performance. However, eligibility for a damages award may depend on whether the plaintiff has requested an injunction first. Therefore, both parties should understand the legal consequences of an integration clause before incorporating one into their written contract.
Integration clauses can have far-reaching effects on the way that an agreement is enforced. If you have any legal questions or needs regarding integration or merger clauses, you may wish to contact an experienced contracts lawyer right away. Your attorney can help you draft any review the contract, as well as any integration clauses that may be needed. Your lawyer can also represent you in court if you a lawsuit has become necessary.