Questions about the effectiveness of whole contractual clauses are increasingly being raised in litigation, particularly in disputes related to long-term contracts such as joint ventures, long-term supply contracts, long-term financing agreements or amendments and/or extensions of such agreements or agreements in which the parties have had a long period of activity. What is a whole contractual clause? A full clause of the contract is a good example of a provision where the parties spend little time, but whose terms may or may not have an unintended impact on the contract and the rights of the parties. (a) where a written contract contains a clause stating that the document contains all contractual clauses (“merger clause,” “full contractual clause”), previous statements, commitments or agreements not included in the document are not part of the contract. After the contract was signed, Shoreline found that the composite code system had not achieved the expected savings. Shoreline recalculated all prices according to the contractual price formula and held approximately $300,000 in payments. Mears tried to impose pre-contract prices for the composite code. The final contract contained a full contractual clause. Shoreline argued that this clause had prevented Mears from availing itself of the pre-contract agreement. However, Akenhead J noted that “the full agreement clause” does not exclude or limit confidence in an established and effective Estoppel, either explicitly or by interpretation. It was found that prior to the start of the contract, the parties shared an assumption and based on this assumption over a long period of time, so it would be unfair to allow Shoreline to apply the terms of the contract in order to avoid the performance of their obligations under the pre-contract agreement. First, such a clause does not prevent the parties from relying on “extrinsic” statements or documents in the contract – that is, documents that can be used to inform the importance of the contract (although such extrinsic documents cannot be used to establish a separate contractual agreement between the parties).
This type of clause is intended to ensure that the terms and intentions of the commitments are defined in a single document. The objective, in turn, is to promote safety and possibly to prevent the parties from using declarations or assurances in pre-contract negotiations to try to verify what the contract requires as a benefit. Entire contractual clauses generally seek to exclude the assurances and statements of the parties relied on by the parties at the conclusion of the contract, but which were not expressly included in the contract. In summary, the parties should ensure that they are informed in advance of what was included prior to its execution and that it has been excluded from the contract. As we have seen, it is often necessary to include additional clauses in the contract in order to exclude unspoken clauses or pre-contract assurances or to include certain pre-contract agreements. Otherwise, a simple misunderstanding could lead to costly litigation. A comprehensive agreement clause is intended to ensure that all conditions relating to the rights and obligations of the parties are defined in a single document that replaces all previous negotiations and agreements. The purpose of such a clause is to prevent the contracting parties from relying on statements or statements during negotiations in order to assert that they have agreed to something other than what is provided for in the treaty at the time of a dispute.