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Merger Clause Defined
Merger clauses, also called integration clauses, are contract provisions that signify a complete and final agreement among the parties. They also supersede preceding written and verbal contracts. A merger clause and the whole are subject to the Uniform Commercial Code (UCC) and applicable state laws.
Merger Explained
Merger clauses protecting one party from having to comply with the terms and conditions of any prior verbal or written agreements. For example, an executive director for a non-profit renews her employment contract each year. The board of directors may insert a merger clause to ensure that past employment contracts from applying to the renewed one.
In the above-referenced example, the employer does not have to honor the initial contract if an intentional discrepancy is discovered.
Here is a quick explanation of a Merger Clause by Fair Contracts.
Purpose of a Merger Clause
The primary purpose of a merger clause is to prevent a party from filing a claim or adjudicating a contract based on other past agreements. Merger clauses not only verify a whole agreement provision to the whole deal, but they also work in tandem with parol evidence rules. Merger clause and parol evidence rules ensure that adjudicators are dealing with a bonafide, merged agreement.
Merger Clause Examples
Examples of merger clauses include:
- Example 1: Renewing an executive director’s contract
- Example 2: Nullifying all other agreements when renting to a tenant
- Example 3: Buying a business outright from another individual
- Example 4: Agreeing to new corporate protocols after a merger
- Example 5: Asset purchase agreements finalizing the sale of a product
Merger Clause Samples
Sample 1 – Lease Agreement:
Incorporation; Amendment; Merger. This Lease, along with any exhibits and attachments or other documents referred to herein, all of which are hereby incorporated into this Lease by this reference, constitutes the entire and exclusive agreement between Landlord and Tenant relating to the Tenant Space, and each of the aforementioned documents may be altered, amended or revoked only by an instrument in writing signed by the party to be charged thereby. All prior or contemporaneous oral or written agreements, understandings and/or practices relative to the leasing or use of the Tenant Space are merged herein or revoked hereby. For the avoidance of doubt, Landlord and Tenant hereby agree that (i) this Lease relates exclusively to the Tenant Space, and (ii) the provisions herein do not supersede the terms of any other agreement between Landlord and Tenant related to matters other than the Tenant Space.
Reference:
Security Exchange Commission - Edgar Database, EX-10.37 2 d222006dex1037.htm LEASE AGREEMENT, Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/1101239/000119312511286045/d222006dex1037.htm >.
Sample 2 – Independent Contractor Agreement:
Merger. This Agreement shall not be terminated by the merger or consolidation of the Company into or with any other entity.
Reference:
Security Exchange Commission - Edgar Database, EX-10.2 6 aqua_ex10z2.htm FORM OF INDEPENDENT CONTRACTOR AGREEMENT, Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/1624203/000155335014001506/aqua_ex10z2.htm >.
Sample 3 – Independent Contractor Agreement:
Merger. This Agreement shall not be terminated by the merger or consolidation of the Company into or with any other entity. In the event of the sale of the Company or substantially all of its assets, the purchaser thereof shall assume the Company’s obligations under this Agreement.
Reference:
Security Exchange Commission - Edgar Database, EX-10.20 2 aqua_ex10z20.htm INDEPENDENT CONTRACTOR AGREEMENT, Viewed April 5, 2021, < https://www.sec.gov/Archives/edgar/data/1624203/000155335016001450/aqua_ex10z20.htm >.
Common Contracts with Merger Clauses
Common contracts with merger clauses include:
- Employment agreements
- Lease agreements
- Independent contractor agreements
- Business associate agreements
- Purchase agreements
- Operating agreements
- Real estate sales agreements
- Asset purchase agreements
- Business purchase agreement
Many contract types generally contain merger clauses. However, there are legal implications associated with their use.
Merger Clause FAQs
Corporate lawyers can provide you with legal advice on merger clauses. However, here are the answers to some vital merger clause FAQs:
Why do contracts often have merger clauses?
Merger clauses are helpful for “tying up loose ends” from previously existing contracts or negotiation discussions. They prevent a party from claiming breach of contract or negligence based on another agreement.
What is a no merger clause?
No merger clauses, also known as anti-merger and non-merger clauses, work opposite of merger clauses. Instead of superseding previous agreements, other agreements withstanding will still apply.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
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