Can You Rely On Pre-Contract Negotiations?

It’s fairly common for parties to spend days, weeks or even months negotiating a commercial deal and then quickly reduce the deal to writing. The question that can then arise is whether the negotiations that took place prior to the written agreement being signed are relevant in determining what you and the other party have agreed to? As a general rule, no. But, like all good rules, there are exceptions.

When you sign an agreement, the court will assume, as a starting point, that the written agreement contains the entire agreement between the parties. One exception is if there was an oral agreement between the parties before the written agreement. This means that there is, in fact, two agreements and the court will have to determine how to resolve any inconsistencies between the two agreements. Another exception arises when pre-contractual dealings need to be considered by the court to determine whether the contract can even be enforced. This may arise if there has been a misrepresentation by one of the parties before the contract was signed, where the parties have made a mistake in reducing their deal to writing and if there has been duress or unconscionable conduct in the negotiations by one of the parties. But the usual position is that the written contract is the whole agreement.

The reason why the courts take this position is simple – if a written contract is not considered to be the whole agreement, it would be very complicated to work out what had actually been agreed. This means that contracts need to be carefully drafted so that they truly reflect the intentions of the parties.

The above is not intended as legal advice. You should obtain legal advice in relation to your own specific circumstances.

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