What is an Integration Clause?
An integration clause is a provision included in a legal contract that declares that the contract is a complete and final agreement between all the parties that are involved, also known as a “final written expression.” The clause not only finalizes the substance of the agreement, but it supersedes all informal understandings and oral agreements relating to the subject matter stipulated in the contract. Often times, contracts that have integration clauses are referred to as integration contracts. The purpose of an integrated contract is to assure that any material, terms or agreements that are fully intended to be in the contract are included. In other words, if a provision was not expressly mentioned in the contract, that means it was probably never intended to be included in the first place.
Why is an Integration Clause in a Contract so Important?
Often times, contractual disputes arise after one party claims the contract doesn’t reflect their initial agreement, or if one party just simply fails to perform under the terms of the contract. It is important to note that any negotiations prior to the written contract that are not stipulated into the final contract are merely just he said/she said allegations. What makes an integration clause so important is the fact that litigation over a contract may become exceedingly costly. A party may be forced to spend thousands of dollars just trying to prove decisions or agreements that were made orally, with little to no evidence of anything in writing. With an integration clause, both parties have in writing that they contend the contract is in its final and complete version, and in most cases, any other oral statements are incontestable. To avoid costly and burdensome litigation, an integration clause should always be included in a legal contract.
Is an Integrated Contract Bullet Proof?
For the most part, yes. The parole evidence rule prevents the introduction of evidence of prior or contemporaneous negotiations that contradict the contractural terms of the final written contract. Except in circumstances that allege fraud, accident or mistake. Florida’s Third District Court of Appeal held that, where a party bases its action to rescind the contract on grounds that the contract was procured by fraud, the contract is not incontestable, even with the presence of an integration clause. Cas-Kay Enterprises, Inc. v. Snapper Creek Trading Center, Inc., 453 So. 2d 1147 (Fla. 3d DCA 1984). Therefore, an integration clause is not always bulletproof, there may be some instances where one party knowingly tries to deceive the other with certain terms of the contract. Other instances may arise where one term or provision was drafted and included by mistake or was added at one point but forgetfully not removed in time before the agreement was signed and executed. To further avoid or prevent these circumstances, it is always best to have a licensed attorney review and revise all legal contracts in which you are a party to.