It’s not uncommon to have many discussions before a contract is signed with a supplier or vendor, with promises about the future. Yet when the written contract arrives, it lacks detail about what one of the people will do or how their product or service will perform.
Can you rely on all the promises of the other side prior to signing the contract? Don’t count on it if the contract has something called an Integration Clause. Essentially, an Integration Clause means that anything not written directly into the contract doesn’t count, even if it was discussed at length beforehand.
Imagine that you hired a general contractor to build a new office for you. Toward the end of the negotiations, you asked for a picket fence around the edge of the lot and the contractor replied, “No Problem! We can take care of the fence.” The picket fence doesn’t require a permit, so you don’t bother to show it on the plans submitted to the Planning Department.
Months later, your contractor declares the work complete. You show up on the site and it looks nice -- except the picket fence is missing and the contractor is demanding payment in full. The contractor says the fence is outside the scope of the contract and his earlier email just meant that he “could” do the work, not that he committed to doing so.
Sadly, you end up in court. The contractor insists that the fence is not part of the contract while you brandish those emails from your negotiations where the contractor promised “We can take care of the fence.”
The judge notes that your contract has an Integration Clause? It says:
“This Agreement constitutes the entire agreement and understanding between the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof.”
The result: you lose. The Integration Clause essentially wipes out any requirements and features that arose in the negotiation that were not spelled out in the contract itself.
The Lesson: if you are buying a product or service and your supplier insists on including an Integration Clause, then make sure all of your requirements are spelled out in the agreement itself. In the case of building an office surrounded by a fence, you could have included the fence on a drawing and made that an Exhibit to the contract itself. Or reference the fence in the list of deliverables by the contractor.
Next time you see you see one of those lawyer-sounding Integration Clauses in an agreement, it’s a cue to double-check to make sure the specifications in the contract are complete. Of course, if you’re lucky enough to be a Contract Wrangler user, we’ll automatically remind you.