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Legal Memorandum: "Zipper" Clause in a Contract

Issue: What is the effect of a ‘zipper’ (or integration or merger clause) when a contract provision has arguably been left out of a contract due to mutual mistake and/or fraud or bad faith?

Area of Law: Business Organizations & Contracts
Keywords: "Zipper" or Integration or Merger Clause; Contract provision; Mutual mistake and/or fraud or bad faith
Jurisdiction: Federal
Cited Cases: 7 F.3d 310; 917 F.2d 100; 195 F. Supp. 2d 551
Cited Statutes: None
Date: 11/01/2004

 

The following cases relate to this question:

Investors Ins. Co. v. Dorinco Reinsurance Co., 917 F.2d 100 (2d Cir. 1990) (noting that refusal to admit extrinsic evidence to explain contract terms was “particularly appropriate given the Agreement’s ‘integration clause,’ which provides that the Agreement represents the entire understanding of the parties to the transaction,” but nonetheless, without comment regarding the integration clause, court considers and decides the plaintiff’s reformation argument based on mutual mistake)

Manufacturers Hanover Trust Co. v. Yanakas, 7 F.3d 310 (2d Cir. 1993) (generally worded integration clause is ineffective to preclude parol evidence relating to fraud in the inducement)

Emergent Capital Inv. Mgmt., LLC v. Stonepath Group, 195 F. Supp. 2d 551 (S.D.N.Y. 2002) (“[A] general merger clause ‘stating that the signatories acknowledge the written document supercedes all prior agreements and constitutes the sole embodiment of their written obligation’ does not bar an action for fraud.  By contrast, when a signatory explicitly disclaims reliance on the subject of the allegedly fraudulent statement, or when the contract states that the defendant makes no representation other than those contained in another more exhaustive clause of the contract, a fraud claim may be precluded.”)

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