Entire agreement clauses are commonly found in various types of
commercial agreements. These clauses often provide that: (i) the
contract constitutes the entire agreement between the parties with
respect to the subject matter of the contract, (ii) the contract
supersedes all prior agreements, understandings, negotiations and
discussions, and (iii) there are no conditions, representations or
warranties, expressed or implied, other than those included in the
contract.
The purpose of entire agreement clauses is to maintain the
certainty of commercial transactions by limiting the source of the
parties' obligations and to prevent reliance by a party on
pre-contractual verbal representations, statements or terms that
are not incorporated in the contract.
The validity of entire agreement clauses has repeatedly been
recognized by the courts in Québec who have held that these
clauses constitute an admission by the parties that they are not
bound by any other agreement or understanding. It is important to
note, however, that Québec courts have also recognized that
there are exceptions to the rule and that, under certain
circumstances, a court may consider evidence of pre-contractual
representations.
In the recent case of 9183-7831 Québec inc. v. Location
Faubourg Boisbriand inc.
("Boisbriand"), 2011 QCCS 5304,
the dispute centered on a commercial lease and the landlord's
obligations under such lease. The tenant attempted to lead evidence
of pre-contractual discussions and the landlord objected to the
admissibility of this evidence on the basis of an entire agreement
clause in the lease. The Québec Superior Court listed the
following circumstances where a court will consider extrinsic
evidence notwithstanding an entire agreement clause:
- In the event of error;
- In the event of fraud;
- When there have been misrepresentations;
- In a consumer contract;
- In contracts contrary to public order;
- To interpret an ambiguous clause in a contract and determine the common intent of the parties.
Given that none of the above exceptions applied in
Boisbriand, the Court maintained the landlord's
objection and refused to take into account any alleged
pre-contractual representations. Ultimately, the Court held that
the parties were governed by the terms of their written agreement
and dismissed the tenant's claims based on alleged promises and
terms that were not reflected in the lease.
The Boisbriand decision serves as a useful reminder that
while entire agreement clauses will not always prevent a court from
examining evidence outside of the contract, they are often
effective tools in limiting the source of parties' obligations
to what is provided for in the "four corners" of their
agreement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
