47 Entire agreement

Desired Result

Entire Agreement clauses (also known as “merger” or “integration” clauses) are intended to ensure that only the terms expressly set forth in the contract constitute the parties’ entire understanding of the agreement. All other previous negotiations, representations, and correspondence between the parties are considered to be incorporated into the agreement. Unless otherwise specified in the contract no ancillary documents, such as schedules or general online terms of use, make up the agreement.

The order of precedence for documents can also be set in this section of the contract. It is important that the Agreement always governs and prevails over any other general terms of use or online “click-through” agreements that the Licensor may choose to additionally impose upon Authorized Users. Setting an order of precedence ensures that in the event there are conflicting terms between documents that the terms in the negotiated Agreement will be followed. Generally, the order of precedence should be:

1. The Agreement
2. Exhibits, schedules, and/or appendices
3. General online terms of use and/or “click-through” agreements

What it means

Generally speaking, the execution of a written agreement “merges” all prior or contemporaneous understandings or verbal agreements into the final written agreement. However, including an express “merger” or integration clause in the written agreement provides added assurance that a court will treat all such prior or contemporaneous agreements as having been merged in.^[1]. Such a clause can be particularly important in the context of e-resource license agreements, which tend to be negotiated via e-mail: A merger clause in the final agreement would mean that any potential “mini-agreements” reached through these e-mail exchanges would not be considered binding, as the final agreement supersedes all other understandings under the so-called “parol evidence rule.” ^[2]

Significantly, however, mergers do not block the consideration of outside evidence like e-mail exchanges to interpret an agreement, if its terms are uncertain. And, of course, extrinsic evidence can also still be considered to demonstrate that one party was fraudulently induced to enter into the agreement, such as through false representations in an e-mail.

Desired Language:

“This Agreement constitutes the entire agreement of the parties and supersedes all prior communications, understandings, and agreements relating to the subject matter hereof, whether oral or written. For the avoidance of doubt, online terms and conditions of use shall not vary or modify the terms of this Agreement.

If Licensor imposes an additional set of terms and conditions on Authorized Users, such terms and conditions shall not materially differ from this Agreement; in the event of any inconsistency between those terms and this Agreement, the terms of this Agreement shall govern and prevail.”

^[3]

Tricks and traps:

If the agreement was originally written in another language (as is common with international vendors), the Licensee will want to ensure that in the event of a dispute the agreement will be interpreted according to the English translation, since there may be discrepancies.

“In the event of inconsistency between the English language versions of this Agreement and any foreign language translation version of this Agreement, the English language version of this Agreement will prevail.”

Additionally, including language about the Agreement governing and prevailing over other terms of use potentially allows one to prevent Licensors from imposing additional usage restrictions. For example, if the Licensee has preserved Fair Use rights in the Agreement and there are no express terms restricting the use of licensed information to train artificial intelligence (which can be considered a fair use), then if a Licensor unilaterally decides to restrict AI via their general online terms of use, the Licensee can argue that its Fair Use rights would take precedence over the conflicting restriction – even were it otherwise enforceable. Though there is not a surefire way to “future-proof” an agreement completely, this device can help prevent a sudden and non-negotiated change in usage rights.

Importance and risk:

This clause is important because it limits one’s risk for litigation over the question of whether previous oral or external (e.g. e-mail) terms were agreed to prior to the contract being signed, as any past negotiations are considered to be incorporated into the Agreement. Generally, the presence of an entire agreement clause will preclude a party from bringing in parol (extrinsic) evidence, because the fully executed agreement is considered to be complete and final.

However, parol evidence can still be used in two scenarios:

• To assist in clarifying an ambiguous term within the contract
• To prove that a party knowingly misrepresented something significant that the other party was relying on as true when entering into the agreement (fraudulent inducement). ^[4]

To avoid parol evidence coming into play even for interpretation purposes, parties may opt to write the contract in a way that limits ambiguity where appropriate. If discussions are later concluded as to new or varied terms, then a written addendum to the agreement should be executed by the parties.