Employment Contracts

“Entire Agreement”


The “Entire Agreement” Term

Such a clause, which is distinct from a disclaimer clause, yet much to the same legal effect, has traditionally been determined to be unenforceable in defending a claim for negligent misrepresentation when the affected party has been shown to be unsophisticated.

In such circumstances, courts have usually required that notice of this specific clause or its likely impact be clearly brought to the attention of the naïve party prior to the execution of the contract.

The Ontario Court of Appeal in Beer v Townsgate, a case involving such an “entire agreement” clause in a real estate transaction allowed the claim in tort based on the oral representations. The plaintiffs were clearly unsophisticated and the contract was a standard form, in fine print and signed in a “frenzy”:

I am not convinced that the wording of para. 24 precludes a claim in tort. However, I agree with the trial judge that, in the circumstances, these respondents cannot be taken to have assented to such a clause in the contract. As Waddams, supra, states, at p. 98:

Thus, if the promisee actually knows of the promisor's intention, or has herself misled him, she will not be able to rely on a different "objective" meaning . . . . [I]f a promisee knows that a signed writing does not represent the true intention of the promisor, he will not be able to take advantage of the writing. The same result should follow even if the promisee does not actually know but ought reasonably to know of the promisor's mistake, for the objective theory cuts both ways. It protects reasonable expectations but not unreasonable ones.

As this was a standard form contract and the clause was in fine print, in the frenzied atmosphere described above, it was not drawn to the attention of these respondents, the contract was signed in haste with no opportunity for them to read it, there can be no reasonable expectation they were assenting to the clause: see Tilden Rent-A-Car Co. v. Clendenning (1978), 1978 CanLII 1446 (ON CA), 18 O.R. (2d) 601, 83 D.L.R. (3d) 400 (C.A.); Zippy Print Enterprises Ltd. v. Pawliuk, 1994 CanLII 1756 (BC CA), [1995] 3 W.W.R. 324, 100 B.C.L.R. (2d) 55 (C.A.).