Avoiding Contractual Loose Ends – Why Entire Agreement
Clauses are Essential

By Peter Kouwenberg

Partner – Head of Commercial

12 November 2024

Article Insights

The purpose of an entire agreement clause is to ensure that the only terms of the agreement between the parties are those written down in the contract itself. Any other statements or representations made during negotiations (with a few exceptions, such as fraudulent misrepresentations) are excluded, unless they are repeated in the contract.

In the absence of an entire agreement clause, one or both parties (typically the supplier) could find that they have unintentionally created a collateral warranty in favour of the other party, or a side agreement. The supplier could find itself contractually bound to provide benefits or to honour warranties which may have been discussed during pre-contract negotiations but were not intended to form part of the final contract.

The importance of an entire agreement clause was illustrated in the case of FoodCo UK LLP & Ors v Henry Boot Developments Limited. In this case, Henry Boot opened a motorway service area close to the Channel Tunnel in Dover and marketed the development to prospective tenants on the basis that the site was intended to benefit from certain facilities, together with an expected footfall of around 88,000 visitors a week.

The project proved to be a commercial disaster, with few of the anticipated facilities available and with only 10% of the weekly visitors. The tenants, including major franchisees of major fast food chains, argued that Henry Boot had misrepresented key elements of the project in brochures which advertised the development.

Henry Boot successfully relied upon the entire agreement in each Lease which excluded liability for any negligent representations made during negotiations and made it clear that the Lease constituted the entire agreement between the parties. As a result, the tenants were required to show that Henry Boot had made fraudulent misrepresentations in the brochures, which they were unable to do as the Court concluded that the statements had been made honestly.

The lessons to be learned are that a carefully drafted entire agreement can have a significant impact on any later dispute and that both parties must always ensure that the contract itself expressly includes any representations or statements which they are relying upon.

If you have any questions about anything discussed in this article, please do not hesitate to contact the Corporate and Commercial team here.

Disclaimer: General Information Provided Only
Please note that the contents of this article are intended solely for general information purposes and should not be considered as legal advice. We cannot be held responsible for any loss resulting from actions or inactions taken based on this article.