Tuesday, April 5, 2016

Entire Agreement Clauses: An Omani Law Perspective


Entire agreement clauses – sometimes referred to as merger or integration clauses – are common boilerplate provisions in many commercial contracts.


The purpose of such clauses is to prevent the parties from adducing evidence extrinsic to the written contract in order to show that the terms of the bargain were different from those recorded in the contract.


That is to say, the parties include an entire agreement clause to prevent statements and representations made either before or after the contract was entered into from having any contractual force (unless they were duly incorporated into the contract by amendment in accordance with its terms).


One reason for excluding evidence outside the written contract is that, particularly in the case of oral statements, it may take time to resolve what was said and agreed to by the parties. Secondly, the parties have greater certainty as to their contractual rights and obligations when they know these are all contained in one written agreement. Finally, written and oral statements made prior to entering into the final agreement may be misleading in that they are as likely to amount to mere aspirations as they are to evidence of any final consensus arrived at between the parties.


General Considerations

When reviewing an entire agreement clause, there are some important pitfalls to be aware of and to avoid:


Schedules and Attachments

If the contract includes schedules or other attachments, it is important to check that the definition of the “contract” includes these schedules or other attachments.


Multiple Contracts

If there are multiple contracts forming part of the same transaction, it is important to include them in the wording of the entire agreement clause, for example: “This agreement and [list other agreements] constitute the entire agreement between the parties….”

Special Considerations under Omani Law

Excluding Misrepresentation

Entire agreement clauses in common law jurisdictions typically aim to exclude liability for misrepresentation, but carve out liability for fraudulent misrepresentation. In other words, the parties agree not to claim for “negligent” or “innocent” misrepresentation in connection with the agreement, but also state expressly that they are not seeking to limit or exclude claims for fraudulent misrepresentation.


Such distinctions are not, however, meaningful under Omani law. Article 103 of the Omani Civil Transactions Law (Royal Decree (“RD”) 29/13) (the “Civil Code”) defines misrepresentation as follows:

Misrepresentation is when one of the two contracting parties deceives the other by means of trickery of word or deed which leads the other to consent to what he would not otherwise have consented to. Deliberate silence concerning a fact or set of circumstances shall be deemed to be a misrepresentation if it is proved that the person misled thereby would not have made the contract had he been aware of that fact or set of circumstances.


Omani law does not recognise negligent or innocent misrepresentation. On the contrary, there must be an intention to deceive by fraudulent means. The onus is on the party alleging misrepresentation to establish that (a) they were deceived by the misrepresentation; and (b) the deception was intentional.


Accordingly, the provisions relating to liability for misrepresentation in standard entire agreement clauses should be tailored to accord with the different treatment of the concept in Omani law. Any attempt to limit or exclude liability for negligent or innocent misrepresentation would be at best superfluous and at worst confusing.


Construction of the Contract

There are other considerations to be borne in mind when drafting entire agreement clauses under Omani law. The Civil Code provides, in Article 165, guidance in the construction of contract terms:

If the wording of a contract is clear, it may not be departed from by way of interpretation to ascertain the intention of the parties. If there is scope for an interpretative construction of the contract, an enquiry shall be made into the mutual intentions of the parties beyond the literal meaning of the words, and guidance may be sought in so doing from the nature of the course of dealings, current trade custom, and the trust and confidence which should exist between the parties.

Further, the Omani courts have long applied the civil law principle of ‘pacta sunt servanda,’ the Arabic rendering of which is equivalent to ‘the contract is the law governing the parties.’ A recent Omani Supreme Court judgement held that the parties to a contract are obliged to fulfil their respective obligations under the contract in good faith, and the terms of the contract may not be amended or invalidated by the court seized of the matter save where there is manifest ambiguity in their construction.


The principle is codified in Article 156 of the Civil Code, which provides that a contract must be performed in accordance with its contents. However, the article goes on to state that the parties’ obligations go beyond those contained in the contract, and include their obligations under the law, custom, justice and normal conduct.


A generic entire agreement clause will not exclude any of the above, but an express and specific term of the contract could arguably prevail over trade usage. Even specific clauses would, however, be unlikely to be effective in excluding the requirement to act in good faith, or legislative provisions considered to go to public order.


Elements of an Entire Agreement Clause

An entire agreement clause in an agreement expressed to be subject to Omani law should contain the following elements:

An Entire Agreement Statement

A statement in the contract that the parties agree that all the terms of the contract between them are to be found within the text of the contract document and nowhere else, and these terms supersede any prior written or oral agreement between the parties.


Non-reliance on Representations Not Contained in the Agreement

A statement that the parties have not relied on any statements or representations other than those contained in the written contract.



Entire agreement clauses seek to prevent a party to a contract from citing evidence not contained in the body of that contract to support a claim that the agreement between the parties was in fact different from that set down in the written contract. Such claims are often brought in connection with alleged misrepresentation.

Under Omani law, misrepresentation must involve an intention to deceive by fraudulent means. It goes to the root of the contract and gives the victim of the misrepresentation the right to rescind the contract. It follows that the provisions in standard entire agreement clauses relating to misrepresentation, and the remedies therefor, are redundant under Omani law.

Negligent and innocent misrepresentation are not recognised concepts in Omani law; and the remedy for (fraudulent) misrepresentation is provided for at law and cannot be limited or excluded by contract.