Making sense of legalese: the “whole agreement” clause

Almost any agreement you sign will conclude with a number of paragraphs, written in dense legalese, and often printed in very small letters. These concluding paragraphs are not only scarcely legible – they are scarcely comprehensible to most laypeople. Lawyers refer to these clauses as the “boilerplate” clauses, as they tend to appear at the end of most contracts and to be fairly standardised.

One such paragraph which one finds in most agreements is the “whole agreement” clause. This clause specifies that “This agreement constitutes the whole agreement between you and us on the subject-matter thereof” – or something similar.

This clause may seem fairly innocuous – but it is extremely important.

In the course of reaching an agreement, many things may be said. One party may make claims about the performance or quality of its product or service. The other party may share information about its needs and requirements. Having seemingly reached agreement on what is needed and whether the product or service offered is suitable, the parties often then sign a standard agreement which records little or nothing that was discussed by them. Owing to the “whole agreement” clause, however, it is assumed that anything of importance to the parties has been recorded in the written agreement – and that anything not recorded is not material and should not be relied upon.

For example, I may visit a cell phone service provider, and explain that I need a mobile service with consistent, quality connectivity to Italy, as I have many clients there. The consultant who assists me assures me that I will never have any problems with my line to Italy with their service. I agree to sign up for a mobile contract, and am provided with a standard form agreement which mentions nothing about connectivity to Italy, and likely limits what the service provider is required to make available to me, and excuses it from liability for my losses due to any connectivity issues that might arise on their side. Should I later discover that I am receiving terrible call quality to Italy, I will be limited to enforcing what is recorded in the contract, owing to the “whole agreement” clause.

While the Consumer Protection Act prohibits the making of false or misleading claims to consumers, it places the onus on me to seek a court order addressing the consequences of any such claim should a dispute later arise. This involves a considerable expenditure of time and money which is best avoided.

It is therefore of the utmost importance that any matters which are important to you and which you wish to be able to rely upon, must be recorded in writing in your agreement.

Should you be provided with a standard form agreement, you have every right to cross out clauses which you do not agree with, or to add clauses which you wish to include. However, the other party must initial these changes to indicate acceptance of them. Merely crossing out or adding clauses alone does not mean that the other party is bound by these changes.

A service provider who makes promises or claims in good faith should have no difficulty in recording these promises or claims in your agreement. If they balk at doing so, then their words should be approached with a great deal of caution.

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Decoding legalese – part 2: “entire agreement” clauses

This series of updates seeks to decode the legalese in some of the most common “boilerplate” clauses commonly found at the end of contracts.

Another very common clause is the “ENTIRE AGREEMENT” clause, which is generally along the following lines:

This agreement constitutes the entire agreement between the parties, and supercedes all agreements and arrangements between the parties, whether written or oral, express or implied, relating to the subject-matter of this agreement. Each party accepts that it is relying entirely on the terms set out in this agreement and not on any pre-contract statement, representation or misrepresentation made by or on behalf of the other party except to the extent, if at all, specifically set out in this agreement. 

When selling a product or marketing a service, a good many grandiose claims may be made regarding quality and results. These are seldom later incorporated into the contract as terms. With a standard “whole agreement” clause in a contract, the buyer is generally deprived of the right to require that those claims be lived up to. The clause has the result that anything the parties may actually have agreed upon, but which is not written down in the contract, is null and void.

For example, before I buy a lawnmower, the salesperson tells me that “this machine is so fast and effective, it will cut your garden maintenance time in half!” I am thrilled, sign the paperwork (including a “whole agreement” clause) and rush home to try out my new purchase. While I find that the lawnmower does in fact work just fine, it works the same as any other mower and does not, in fact, cut my garden maintenance time in half. Nowhere in the agreement with the salesperson did we record the salesperson’s promise, and so in general it is excluded from the agreement and unenforceable. I must live with my purchase.

There will be some exceptions under the Consumer Protection Act, which forbids misleading statements by suppliers and enables consumers to cancel transactions in some cases where they have been misled, but this Act only applies to certain transactions. Even where the Act applies, proof of the misleading statement will be very difficult if it was not recorded in writing.

In general, therefore, it is essential to ensure that any important promises made, are written into the contract. On a pre-printed standard form, additional clauses written in by hand and initialled by both parties are perfectly valid and binding. If a supplier makes a promise, they ought not to have any difficulty in formalising the promise. If they are reluctant, it is probably worth questioning their sincerity and therefore weighing up the transaction very carefully before committing.

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