So, you've finally arrived at the time when you sign the contract, but are you certain that you know exactly what you are committing yourself to?
Implied terms, statutory provisions, oral representations prior to contract and so on. All of these could, at a later date, influence the interpretation of your contract.

Therefore, in many bespoke forms of contract, it is increasingly commonplace to find the inclusion of so called 'entire contract' clauses.
These can take many forms but in general the purpose of an entire contract clause is to limit the parties obligations and liabilities to those that appear in the text of the contract.

An entire contract clause could be used to exclude terms which would ordinarily be implied into a contract by statute. One example, which is of particular importance to the construction industry, is the Sale Of Goods Act 1 979 (section 14(3)). Where goods are sold in the course of business, there is an implied condition that goods supplied under a contract are reasonably fit for purpose. This implied term might be excluded by an entire contract clause.

Although, a party to a contract will have comfort from the knowledge that such terms are excluded from their contract, the effectiveness of an entire contract clause may be weakened by the Unfair Contract Terms Act 1977, by common law, and by the wording of the clause itself.

Under the Unfair Contract Terms Act some contract terms which seek to exclude or restrict liabilities are automatically made completely ineffective. An example of this is liability for death and injury caused by negligence. A contract can never exclude this liability. In other cases exclusion clauses are valid only if they satisfy a test of reasonableness imposed by the Act. Under section 6(3) of the Act, liability under section 14 (3) of the Sale Of Goods Act can be excluded but only if the clause satisfies the reasonableness test. Common law also operates to render certain clauses ineffective although the number of limitations has been reduced by the Act.

The effectiveness of an entire contract clause may also depend on the wording itself. In the recent case of Milburn Services Limited -v- United Trading Group (UK)Ltd, United Trading had entered into a main contract for the blasting and painting of an anchored oil tanker. United Trading employed Milburn as Sub-Contractor on terms which incorporated some of the obligations from the main contract. The project fell behind programme and the employer, Yemen Hunt Oil Corporation Limited, terminated the main contract.

In the subsequent action brought by Milburn, United Trading sought to rely upon an entire contract clause which had been incorporated into the subcontract from the main contract. They sought firstly to exclude Milburn's common law right to damages and secondly to exclude an implied term that Milburn be allowed access to the works.

The entire contract clause incorporated into the sub-contract stated ;
"CLAUSE 19
This Contract constitutes the entire agreement between the parties hereto with respect to the subject matter of the exhibits hereto, and supersedes any understanding, oral or written, hereto before entered into or on account of the parties and may not be changed, modified or amended except in writing signed by a duly authorised officer of the parties hereto"

The sub-contract also stated that;
"CLAUSE 5.1
In the event that the [main] contract is terminated by the company [YH] for any reason attributable to UTC, then UTG hereby undertakes to reimburse, on demand all costs and expenses incurred by MSL as a result of such termination"

"CLAUSE 9.1
Subject as herein provided, the parties agree to bear their own costs"
In response to the first issue, His Honour Judge Bowsher QC found that clause 9.1 did not exclude any right to damages and was a means only of apportioning costs. Other clauses in the contract such as clause 5.1 could be explained on the basis that they merely extended ordinary rights to common law damages. As there were no express words in the sub-contract excluding common law rights to damages United Trading were unable to exclude this right.

Regarding the second implied term, Judge Bowsher found that it was reasonable and necessary that someone who undertakes work to be given access to the place where the work is to be done. Such an implied term was not excluded because it was clearly the parties intention by clause 19 that the contract should only be construed from the written agreement on its own without reference to anything written before or afterwards apart from written and authorised variations. Judge Bowsher did not see clause 19 as excluding vital implied terms such as the implied requirement of access.

The effectiveness of entire contract clauses in contracts can be dramatic and can be a useful mechanism for ensuring that the parties obligations and liabilities are set out from the start. If an entire contract clause is incorporated from main contract to sub-contract it should be done with caution to ensure that the wording is entirely compatible with the parties contractual relationship under the subcontract. If the clause is to be watertight it is clearly important that the clause is drafted carefully and precisely to avoid any uncertainty.