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Entire Agreement Clauses: Representation...

Pathak, Akhileshwa...

Technical Note

Entire Agreement Clauses: Representations and Misrepresentations

Pathak, Akhileshwar

IIMA-STR0462TEC | Published March 31, 2021 | 7 pages Technical Note

Collection: Indian Institute of Management, Ahmedabad

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Learning Objectives

Business contracts have come to have an entire agreement clause that seeks to exclude all communications prior to making the contract. Assigned contracts are fully binding, the clause is highly effective in excluding all representations, promises and agreements preceding the signed contract. The note reviews court judgements to explore the scope of an entire agreement clause. The clause is valued for bringing certainty to the contract. The term "representation" refers to statements made on the substance of the transaction. It does not include misrepresentations which is to mislead the party. The court judgements studied herein emphasize the need to use clearer and emphatic terms to exclude misrepresentation and its effects.

Entire agreement clauses are effective in excluding prior representations. Entire agreement clauses bring certainty to contracts. Entire agreement clauses may not exclude misrepresentations unless is clearly and emphatically stated in the clause.