South African Contract Law is fundamentally a modernised version of the of . A can be defined as an agreement entered between two or more Parties with the intention of creating a legal obligation. As such, Contract Law provides the legal framework within which these persons can transact business and exchange resources, secure in the knowledge that the law will uphold their agreements and, if necessary, enforce them.
Most forms of contracts, especially commercial ones, tend to contain a variety of so-called “boilerplate” clauses. These are clauses with standard wording that are routinely used. One of most frequently used clauses – and which plays an important role when contracts have gone awry – is the “Entire Agreement” Clause.
An Entire Agreement Clause generally provides that the contract reduced to writing constitutes the entire agreement and understanding between the Parties. The focus of the clause is on ensuring clarity on the exact terms that the Parties have agreed upon. However, it must be noted that such a clause effectively nullifies any previous understandings if such have not been incorporated into the agreement.
This is to prevent the Parties from subsequently raising claims that statements or representations made during contractual negotiations, and prior to the signing of the written contract, constitute additional terms of the agreement. Parties thus include an Entire Agreement Clause in the Contract to prevent those pre-contract statements and representations from having any contractual force.
An Entire Agreement Clause often contains the following elements:
It’s important to take note of some pitfalls when drafting an Entire Agreement Clause:
An example of a comprehensive Entire Agreement Clause would be as follows:
“1. This agreement [and [list other relevant agreements, if applicable]] constitutes the Entire Agreement between the Parties and supersedes and extinguishes all previous drafts, agreements, arrangements and understandings between them, whether written or oral, relating to this subject matter.
2. Each Party acknowledges that in entering into this agreement it does not rely on, and shall have no remedies in respect of, any representation or warranty (whether made innocently or negligently) that is not set out in this agreement.
3. No Party shall have any claim for innocent or negligent misrepresentation based upon any statement in this agreement.”