MIAMI BUSINESS LITIGATION: CONTRACTUAL “INTEGRATION CLAUSE”

Under Florida contract law, integration clauses (also known as merger clauses) are important to clearly define the terms of a contract. An integration clause generally limits a contract’s terms to only those that are expressly contained within the written contract. See Vigortone AG Products, Inc. v. PM AG Products, Inc., 316 F. 3d 641 (7th Cir. 2002) (“By virtue of the parol evidence rule, an integration clause prevents a party to a contract from basing a claim of breach of contract on agreements or understandings, whether oral or written, that the parties had reached during the negotiations that eventuated in the signing of a contract but that they had not written into the contract itself.”). Integration clauses can prevent contracting parties from using parol evidence to vary a contract’s terms by adding terms that are not contained within the four corners of the contract. However, some circumstances permit the use of parol even when a contract contains an integration clause. Peter Mavrick is a Miami business litigation attorney, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

The presence of a merger clause is not the sole basis for determining whether a contract is fully integrated. Lowe v. Nissan of Brandon, Inc., 235 So. 3d 1021 (Fla. 2d DCA 2018) (“[T]he existence of a merger clause does not per se establish that the integration of the agreement is total.”). A court may allow parol evidence despite the existence of a merger clause when the contract is ambiguous, Jenkins v. Eckerd Corp., 913 So. 2d 43 (Fla. 1st DCA 2005), or when a party claims that they were fraudulently induced to enter into the contract. Fla. Potter Stores of Panama City, Inc. v. Am. Nat’l Bank, 578 So. 2d 801 (Fla. 1st DCA 1991).

The fraudulent inducement exception is limited to instances where the statement inducing fraud is not adequately discussed within the contract and not expressly contradicted by the contract. In Ioannides v. Romagosa, 93 So. 3d 431 (Fla. 4th DCA 2012), a doctor recruited another doctor to join his medical practice by telling the doctor that “his total annual compensation from salary and bonuses would easily exceed $500,000 per year . . . .” The two doctors subsequently entered a written contract explicitly stating the terms of compensation, which included a maximum base salary of $250,000 plus a “production bonus.” The contract contained an integration clause. The doctor who joined the practice quit after two years and filed a fraudulent inducement lawsuit because he was never paid more than $500,000 per year. The defending doctor moved for summary judgment based on the contract’s integration clause, but the motion was denied by the trial court. The Florida Fourth District Court of Appeals reversed and granted summary judgment based on the presence of the integration clause because the doctor’s compensation was “adequately covered” by the written agreement.

It is important to include integration clauses in contracts because they can help prevent attempts in litigation to vary the terms of a contract based on alleged oral statements. While integration clauses may not always prevent the admission of parol evidence or prevent fraudulent inducement claims, they can help do so if the rest of the contract is complete.

Peter Mavrick is a Miami business litigation lawyer, and represents clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.