Entire Agreement Clauses are meant to prevent negotiations that occurred prior to the contract being formed from influencing the Court’s interpretation of the terms set out in the final contract. In other words, past discussions are to have no bearing on the understanding of the contractual terms. In theory, a fully integrated agreement of this kind supplants any earlier oral or written agreements. There is competing jurisprudence in which Entire Agreement Clauses have been both effective and ineffective. However, Manograte Estates Inc. v. Kirkor Architects and Planners is a recent Ontario Court of Appeal decision where an Entire Agreement Clause was effective.
In Manograte Estates Inc. v. Kirkor Architects and Planners, the Ontario Court of Appeal upheld the Motion Judge’s decision that the Entire Agreement Clause in the relevant agreement, regarding architectural consulting for a construction project, operated as a complete defence to the appellants’ claim of alleged negligent misrepresentation.
The Entire Agreement Clause stated that the appellants were precluded from suing the respondent based on any pre-contractual representations. There were two agreements involved, and the Court of Appeal found that the Motion Judge did not err in her conclusion that the “Second Agreement was not a continuation of the First Agreement but an entirely new agreement”, since the changes in the “scope and terms of the project in the Second Agreement were so fundamental that they amounted to a new agreement”. This meant that, “that Manorgate was not entitled to rely on the representation even if it had been made by Kirkor”.
As such, the appeal – from the summary judgment decision to dismiss the action – was dismissed.
An Entire Agreement Clause can be a powerful tool that may prevent a party from using long, complex, and dynamic pre-contractual negotiations from forming the basis of a breach of contract claim. However, Entire Agreement Clauses must be drafted with an eye for detail, as a simple boilerplate clause of this kind may not be sufficient to protect one’s intention as a contracting party.
If you require legal advice regarding these practice areas, please contact Gilbertson Davis LLP for an initial consultation.