Lawyers often will
insert a provision in contracts stating that the only way
the agreement can be amended is “in writing and signed by both
parties.” Another favorite addition is to state that “all earlier
agreements, discussions, proposals and negotiations” have been
integrated into the contract and are superseded by the written
These paragraphs generally appear one
after the other, and lawyers refer to them as “integration
clauses.” But do they do the trick?
Crux of the Matter
While there has been some disparity in
the decisions handed down by judges over the years, sometimes the
courts pay no attention to the integration clause.
The intent of the clause is to erase
the slate up to the time the agreement is executed. If particular
items have not been incorporated into the final document, they will
not count; and, if changes are to be made, they must be mutually
agreed to in writing.
When attempting to overcome an
integration clause, the parties still are bound by the basic rules
of contract law, which require “consideration” and an offer and
acceptance by both parties. Consideration -- legal give and take --
is the price paid by both parties for the concession.
Because integration clauses are
vulnerable, parties should act carefully when dealing with each
other after the agreement has been signed.
A case decided in 1992 by the
Massachusetts Supreme Judicial Court, and which since has been
approved by many other courts, dealt with the question of whether a
written contract could be amended by an oral agreement, where the
contract specifically excluded such changes unless in writing.
The court said the verbal agreement can
override the signed contract, stating an integration clause creates
only a presumption that the contract cannot be changed other than
as allowed by the language of the integration clause. If there is
sufficient evidence of a valid, subsequent contract, even though
oral, the oral modification can be enforced.
In last month’s column, I discussed
instances in which e-mails can be a form of an enforceable
contract. In another case from Massachusetts, the court held that
e-mail exchanges also can amend the effect of a contract, in this
case an employment agreement concerning a salary reduction, when
the original agreement included an integration clause stating the
contract could be changed only in writing.
In some states, such as New York and
those that have adopted the Uniform Commercial Code, a state law
can bar any oral modification. Nonetheless, an exception to this
was found by one federal court, which said if there is partial
performance under the oral modification, then the oral modification
will stand as an amendment to the original contract.
Subsequent conduct by the parties,
consistent with the oral changes, might result in the courts
finding that the oral amendment takes precedence over the written
agreement, despite both contract language and state law. Even the
Uniform Commercial Code recognizes that subsequent conduct
consistent with oral statements can override the integration
Despite these cases, meeting planners
still should include the integration clause to negate contentious
matters that might have arisen prior to the signing of the formal
One caveat: If any part of the contract
is ambiguous, the court might allow testimony and other evidence to
help explain what the parties intended in the first place.
Jonathan T. Howe,
Esq.,is a senior partner in the Chicago, St.
Louis and Washington, D.C., law firm of Howe & Hutton Ltd.,
which specializes in meetings, travel and hospitality law. Legal
questions can be e-mailed to him at firstname.lastname@example.org.