FLORIDA BUSINESS LITIGATION, PART ONE: CONTRACTUAL “INTEGRATION” OR “MERGER” CLAUSES CAN REDUCE UNCERTAINTY IN BREACH OF CONTRACT LAWSUITS

This article is part one in a two-part series of articles on contractual “merger” or “integration” clauses, which purport to limit the terms of a contract to the terms contained in the written document signed by the parties. This can help ensure that neither party will later claim that he was promised something as part of the deal, but that promise was not actually written into the contract terms. Under Florida law, merger clauses are enforceable and effective ways to ensure that the parties are in complete accord as to the terms of their agreement. Integration clauses, however, are not ironclad and there are some limitations.

A merger clause will not prevent a court from considering whether additional terms were intended when the contract contains a patent ambiguity. Additionally, a merger clause will not prevent a party from claiming that she entered into the agreement only due to the fraud of the other party. Peter Mavrick is a Broward County business litigation lawyer who has extensive experience in representing the interests of businesses and business owners.

Florida courts generally will not allow litigants to enter evidence to modify the clear terms of a written contract. This legal principle is called the “parol evidence rule.” The Supreme Court of Florida in Florida Moss Products Co. v. City of Leesburg, 112 So. 572 (Fla. 1927), explained the parol evidence rule as follows:

[The parol evidence rule] does not permit proof of an oral agreement for the purpose of imposing a further contractual obligation on one of the parties, of which there is no indication or suggestion in the written contract, when such obligation is not only inconsistent with, but repugnant to, other plain terms of the instrument. It is not permissible, under the guise of proving by parol the consideration of a written contract, to add to or take from the other provisions of the written instrument, nor to modify, impair, or destroy the operative effect thereof. If the rule were otherwise, the obvious result would be to abrogate the long-settled rule respecting the finality of written contracts.

“The terms of an integrated written contract can be varied by extrinsic evidence only to the extent that the terms are ambiguous and are given meaning by the extrinsic evidence.” Avis Rent A Car Sys., Inc. v. Monroe County, 660 So.2d 413 (Fla. 3d DCA 1995).

While the parol evidence rule usually applies to all written unambiguous contracts, parties can further protect their written agreement from claims that the written contract does not reflect the entire agreement with the addition of a merger/integration clause. The following is an example of a merger/integration clause:

This agreement contains the entire understanding among the parties and supersedes any prior understandings and/or written or oral agreements among the parties respecting the within subject matter. There are no representations, statements, promises, arrangements, or understandings, oral or written, between or among the parties hereto relating to this agreement or the relationship between the parties not fully expressed herein.

“[T]he purpose of integration clauses is to affirm the parties’ intent to have the parol evidence rule applied to their contracts.” Centennial Mortg., Inc. v. SG/SC, Ltd., 772 So. 2d 564 (Fla. 1st DCA 2000). Integration clauses serve to demonstrate that a clear and complete contract has been formed, thus barring parol evidence to further discharge, alter, reduce, or otherwise change the terms of a valid contract. See Duval Motors Co. v. Rogers, 73 So. 3d 261 (Fla. 1st DCA 2011).

Parties may not add evidence of other terms than those explicitly contained in an agreement which contains an integration provision. See also Trinchitella v. D.R.F., Inc., 584 So. 2d 35 (Fla. 4th DCA 1991) (finding that a prior signed contract is completely subsumed by subsequent contract with an integration clause); Trinchitella v. D.R.F., Inc., 584 So. 2d 35 (Fla. 4th DCA 1991) (finding that a prior signed contract is completely subsumed by subsequent contract with integration clause); Fed. Deposit Ins. Corp. v. Hemmerle, 592 So. 2d 1110 (Fla. 4th DCA 1991) (barring litigant from presenting evidence that he relied on any “statement, representation[,] or warranty not contained in the … agreement” with a merger clause).

Peter Mavrick is a Broward County business litigation attorney. This article does not serve as a substitute for legal advice tailored to a particular situation.