Entire Agreement Clauses in Singapore: What are They and What Do They Do?
Disputes sometimes arise over the terms of the contract – where one party claims that a certain term was part of the contract while the other denies this.
To ensure that a contract’s terms are certain and final, parties may insert an entire agreement clause into their written contract.
What is an Entire Agreement Clause?
An entire agreement clause is a clause in the contract stating that parties agree that all the terms of the contract between them are to be found within the text of the contractual document and nowhere else.
The purpose of an entire agreement clause is to define and confine the parties’ rights and obligations within the four corners of the written document. This effectively prevents both parties from adding or qualifying terms in the contract by referring to representations or negotiations made before the contract was formed.
In other words, any oral agreements, negotiations or separate written agreements that the parties have agreed upon are not part of the contract and cannot be enforced through it. The entire agreement clause may even go as far as to supersede and extinguish such prior negotiations and/or agreements, making them void at law.
Whether or not a clause is an entire agreement clause largely depends on the clause’s precise wording and the context surrounding the contract’s formation.
Here is an example of an entire agreement clause:
“This agreement 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.”
Can Terms be Implied into a Contract Containing an Entire Agreement Clause?
In some situations, an entire agreement clause may state that it excludes implied terms from the contract, i.e. terms read into a contract despite not being expressly stated in it.
However, the Singapore Court of Appeal has held, in Ng Giap Hon v Westcomb Securities, that having such an entire agreement clause in a contract generally will not exclude the implication of terms into that contract.
This is because:
- The nature of implied terms is such that parties would not have considered them when they entered into the contract. For example, terms are implied by fact where the parties completely missed out on the issues raised by those terms in their contract. This is even though these terms may represent their respective interests.
- There is no reason why a term cannot be implied if it does not contradict any of the contract’s express terms (and passes the test(s) for being implied into a contract).
Allowing terms to be implied into contracts containing an entire agreement clause prevents parties from relying on the entire agreement clause to exclude terms unfavourable to them just because they were not expressly stated in the contract. This ensures that contracting parties’ interests are protected.
If parties intend for the entire agreement clause in their contract to have the effect of excluding all implied terms, they will have to express such effect in clear and unambiguous language.
What Should You Do Before Signing a Contract Containing an Entire Agreement Clause?
Before signing a contractual document containing an entire agreement clause, you should check that the document also contains all the terms, made in any separate oral or written agreements, that you want to be enforced under the current contractual document. Otherwise, these terms are unlikely to be part of the contract and so cannot be enforced under it.
If any term(s) that you would like to have included in the contract is missing from the document, you will have to negotiate with the other party to the contract to have the term(s) drafted in. Whether the other party will agree to your request will then depend on your negotiation skills and the amount of influence you have over the other party.
Should you need legal advice on interpreting your contract’s entire agreement clause, and/or would like to hire a lawyer to assist with the drafting and negotiation of the terms of your contract, you may get in touch with one of our corporate and commercial lawyers.
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