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Entire-agreement (“integration”) clauses in contracts

In some jurisdictions, the presence of an ‘entire agreement’ or ‘integration’ clause will not necessarily end a dispute whether a party should be bound by an alleged oral promise or representation outside the contract itself.

In a 2008 case involving Shell Oil Company, a group of gasoline dealers claimed that Shell had orally represented that a rent subsidy would not be terminated except in a situation such as a war or an oil embargo. When Shell’s successor terminated the subsidy, the dealers sued. They argued, successfully, that Shell’s alleged oral representations had the effect of amending the franchise agreement — this, even though the agreement had an integration clause that purported to rule out oral promises.

The appeals court affirmed the judgment against Shell. The court cited Massachusetts law to the effect that “the question of integration is one of fact reserved for the trial judge, whose resolution of that issue will not be reversed unless clearly erroneous.” Marcoux v. Shell Oil Prods. Co. LLC, 524 F.3d 33 (1st Cir. 2008) (citation and internal quotation marks omitted).

The appellate court quoted the Restatement (Second) of Contracts § 209 cmt. b (1981): “Written contracts, signed by both parties, may include an explicit declaration that there are no other agreements between the parties, but such a declaration may not be conclusive.” (Emphasis added.)

If a contract is for the sale of goods, UCC § 2-202 would have a limited integration effect, because that statutory clause includes several exceptions.

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