Does Your Integration Clause Fully Protect You?

As the First Circuit recently discussed in Guldseth v. Family Medicine Associates, LLC, however, integration clauses can come in different shapes and sizes. As an initial matter, there is the question of whether the clause results in the contract being fully integrated or only partially integrated:

By fully integrated, we mean a statement which the parties have adopted as a complete and exclusive expression of their agreement. Compare that to [a] partially integrated agreement, which means the agreement is intended as a final expression of one or more terms, but not as the complete and exclusive expression of all terms to which the parties agreed. The degree of integration in turn dictates the degree to which earlier agreements are discharged by the later-formed agreement [and] whether an agreement is fully integrated is … an issue of fact.”

Indeed, because the scope of an integration clause is an issue of fact, the First Circuit cautioned that even “straightforward contractual language asserting integration will not always compel a conclusion that a writing reflects a complete and integrated agreement.” Other factors that courts consider in determining the scope of an integration clause are whether:

1. The clause is part of a boilerplate agreement,
2. The parties had equal bargaining power, and
3. The parties engaged in bona fide negotiations over the terms of their agreement.

So, if you want to give yourself the best chance of enforcing an integration clause fully, tailor it to the specific deal and don’t simply use generic language. Also, do what you can to document that your counterparty was an active participant in the negotiations or at least was offered the opportunity to suggest changes to the initial draft agreement you might have proposed. Failing to take these small, extra steps can provide a future adversary with a toe-hold to a defense that otherwise might not exist.