Litigating Merger Clauses Amid Courts' Increasing Skepticism: Leveraging New Theories of Contract Interpretation

Recording of a 90-minute CLE video webinar with Q&A


Conducted on Thursday, September 23, 2021

Recorded event now available

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Course Materials

This CLE course will sharpen commercial litigators' knowledge, authority, and persuasiveness when pressing clients' position on the meaning and applicability of "merger" clauses in contracts. The program will discuss courts' increasing reluctance to enforce merger clauses, review the different ways merger clauses are construed and the parol evidence rule, suggest how to recognize potentially flawed or incongruent methodologies their judge might be using, and offer strategies to counteract them.

Description

Although the use of merger clauses is ubiquitous in both commercial and consumer contracts, courts are becoming less inclined to enforce them on their face. Counsel must understand and be prepared to offer evidence that that the contract accurately states the parties' genuine, final, and ultimate intent and that the merger clause was not just boilerplate imposed by the party with more leverage.

The parol evidence rule usually prevents extrinsic evidence to vary the terms of a contract, but other evidence may be used to supplement or explain the agreement. It can be difficult, however, to distinguish between explaining and contradicting. Moreover, numerous exceptions to the parol evidence rule can come into play.

Whether the court employs the "textual" or "contextual" or a "something-in-between" approach to contract interpretation is critical, but the law is so confusing and muddled that commentators disagree as to which is the "majority" approach. Contract interpretation has been called the "least settled, most contentious" area of contract law and constitutes the largest source of contract litigation.

Listen as this experienced panel of litigators discusses the enforcement of merger clauses, the parol evidence rule, and the highly unsettled and contradictory approaches courts consider when construing contracts.

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Outline

  1. Overview of contract interpretation and the parol evidence rule
  2. Role of merger clauses
  3. Enforcing (or challenging) merger clauses
    1. Textual vs. contextual approach
    2. Explaining vs. contradicting
    3. Ambiguities
    4. Evidence required

Benefits

The panel will review these and other crucial issues:

  • What weight should a merger clause be given, and should the answer depend on factors such as the sophistication of the parties?
  • Is the parol evidence rule still viable, or have the exceptions swallowed the rule?
  • When is a contract ambiguous, really?
  • What evidence should a court consider to determine, for example, how thoroughly a contract was negotiated or the relative leverage of the parties?
  • What is the practical difference between the textual and contextual approaches?
  • What is the difference between a complete merger clause and a partial merger clause?
  • What language in merger clauses creates the most debate?

Faculty

Goldman, Rachel
Rachel B. Goldman

Partner
Bracewell

Ms. Goldman is a commercial litigator with over 20 years of experience in federal and state courts, at the trial and...  |  Read More

Shargel, David
David A. Shargel

Bracewell

Mr. Shargel is a business litigator with extensive experience representing clients in complex commercial disputes and...  |  Read More

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