LinkedIn Series Chapter 6: Mergers & Amendments

January 7, 2014
Jack Walsh

Two for one! Everyone has seen merger and amendment clauses. They are often smashed together in the same paragraph at the end of the contract. One impacts the interpretation of the agreement looking back (mergers), the other looking forward (amendments).

The merger provision provides that the written contract is the entire agreement between the parties and that any prior agreements (whether oral or written) are not part of and do not modify the agreement. If two parties to an agreement disagree on how to interpret a contract, everyone heads to the email trail or other documents leading up to the agreement to show they are right. All kinds of things (or nothing) may have been discussed before an agreement was reached. Rejected proposals and stray emails can cause real mischief. A merger clause can and will greatly limit the use of any of this stuff.

Amendment clauses are tricky. Things always change. Contracts are rarely performed as written. Many contracts attempt to bar changes – amendments in legal lingo – unless the change/amendment is in writing. This clause falls into the “no harm in trying” category. Certain contracts and by extension their amendments, like those for the sale of land, must be in writing. Every other contract can be oral, even if it isn’t a good idea not to write it down. Parties to a contract cannot strip themselves of the power to enter into oral contracts and/or amendments. As such, even if there was a no oral modifications clause, the parties could agree orally to eliminate the no oral amendments clause, making an oral contract enforceable. Nonetheless, the no oral modification clause appears in many contracts where oral modifications are absolutely acceptable. Parties add it as a deterrent to litigation.

These clauses usually wind up in the agreement no matter who gets to be the acceptor because everyone’s form has these clauses. There are variations, but the variations do not usually make a difference in the result of the dispute.