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A Word About Integration

It’s right there at the end of your contract. A funky little clause that most people probably skip right over. Jane Widgetmaker has exhausted herself studying the main business points covered in the contract so she just skims the rest of it. It’s just boilerplate legal stuff anyway, right?

What I’m talking about, of course, is the lowly INTEGRATION clause. Often they read something like this:

This document contains the complete and final agreement of the parties on the subject matter. All prior negotiations, representations and understandings are expressly superseded and may not be relied upon.

CelloCloseup1.jpg(Actually, this is a damn fine example of an integration clause. Too often, the ones I see leave out some of the important lingo. For instance, you need to use both “complete” and “final” in the first sentence to really have an effective integration clause. Otherwise you end up with a “final” contract, but not a “complete” one. This means the Yo-Yo on the other side of the deal can say something else has to be added to make it a “complete” writing, which then changes the “final” deal entirely. And I’m not just talking about transactions with Master Cellists here.)

Now, “integration” has nothing to do with the 1960s civil rights movement. When Governor Wallace stood in the schoolhouse door to stop integration he was not trying to thwart effective contract drafting. No, “integration” in this instance means that the contract is a complete unit. It’s the whole kit and caboodle, the entire shooting match, the 100% genuine article. When you’ve got an integrated contract, there is theoretically nothing outside of the written document that can have any affect on the deal.

Well, that’s the theory any way. The practical reality is something else again. The legal rule that is supposed to control is known as the “Parol Evidence Rule.” The Parol Evidence Rule comes into play once you have a integrated contract; it says that evidence of prior or contemporaneous oral discussions can’t be used to vary the written words of the contract. Yet in spite of the legal sounding bodaciousness of the Parol Evidence Rule, its application can often be sidestepped. Whether a contract is integrated or not, the courts in Alaska will still admit outside evidence to show what the words of the contract mean, or to determine whether there is a basis for setting the whole contract aside.

Notwithstanding the courts’ floccinaucinihilipilification of the Parol Evidence Rule, integration is still important in contract drafting. If you want to have any hope of the words used in the contract being given actual effect, then a proper integration clause is necessary. Also, the clause brings it to both parties’ attention that every aspect of their transaction needs to be stated in the written document. For instance, if Jane Widgetmaker really wants the guy on the other side of her deal to throw in his CD collection of Yo-Yo Ma Plays Elvis’ Greatest Hits, then she had better make sure the contract says so. (Just imagine, “Burning Love” sawed out on a cello!)

So check that there is a proper fine version of the funky little clause is at the end of each of your contracts.