Integration Clauses
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Integration Clauses
Tip provided by:
Robert J. Incollingo
416 Black Horse Pike
Glendora, NJ 08029
856-234-3800
www.rjilaw.com
Not all contracts are expressly stated. Some are implied by law based on the relationship of the parties, and some are implied in fact by the parties’ conduct. In business, though, express contracts which state the important terms of agreement are the rule. Express contracts can be oral, written, or some mix of the two, and they are sometimes revised as performance progresses.
It is entirely possible to change the terms of a written contract by subsequent oral agreement, unless the contract contains what is known as an integration clause. An integration clause, sometimes in a contract under the headings “No Oral Modification” or “Entire Agreement,” states that the written contract represents the entire understanding of the parties with respect to the subject matter thereof and no changes are valid unless made in writing and signed by the parties. Such a clause will knock out oral understandings, and even bar common-sense incorporation by reference of updated collateral documents. An integration clause will probably prevent you from successfully suing for any misrepresentations preceding the signing of the contract, knocking out your fraud in the inducement defense to the deceiver’s claims of breach.
On the plus side, a well-considered integration clause manages the risk of misunderstandings, and is often a good idea when strangers are dealing with one another at arms’ length. By insisting on the rigor of written amendment, the parties can be sure of the four corners of their contract should a dispute later arise. Before you sign a contract with an integration clause, make doubly sure that all essential terms are in writing.
Bob Incollingo is an attorney in private practice in New Jersey and a regular speaker at Infraspection Institute’s annual IR/INFO Conference.
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