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An entire agreement clause is an attempt to exclude any future claim
based on statements made during pre-contractual negotiations. Such
clauses usually have three elements:
1. It will state that the agreement constitutes the whole agreement
between the parties and supersedes any previous agreements. This
is to prevent any claims that pre-contractual statements were actually
collateral warranties to the agreement.
2. The clause will usually include an acknowledgement by both sides
that they have not relied on any representation that is not set out in
the agreement. This is designed to prevent subsequent claims based
on pre-contractual misrepresentation.
3. It will be said the parties agree that they have excluded all remedies
for representations, warranties or undertakings, except as provided
for in the agreement.
There can clearly be significant advantages in having an entire
agreement clause. It provides certainty and effectively bars most future
claims. But, a party who proposes an entire agreement clause is
normally thinking in terms of preventing claims being made by the other
side against them and the converse can apply; what if you actually want
to make a claim against the other side? Having insisted upon an entire
agreement clause, you might find that your claim is then thwarted (eg if
you want to be able to rely on pre-contractual statements).
At the end of the day, it is a balancing act. Do you want the certainty of
an entire agreement clause, or do you want to be able to rely on
statements made by the other side during negotiations? Source: Clifford
Chance.
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