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IAI Actuarial Core Principles · Business Management · Implied terms, exclusion of liability, contractual remedies and damages

Meenakshi Life engages an external actuary, Dev, under a written agreement with a clause stating: 'This contract contains the entire agreement between the parties.' Dev later wishes to rely on an oral assurance by a Meenakshi manager before signing, that he would be given access to a proprietary data warehouse, which does not appear in the document. Which statement is most accurate?

An entire agreement clause generally prevents earlier oral assurances from being treated as terms of the contract, so Dev would find it hard to enforce the data warehouse promise. The clause usually would not protect against fraud or defeat statutory rights.

  1. AThe assurance is automatically a binding term because it was spoken first
  2. BThe entire agreement clause is void in every case under Indian law
  3. CThe assurance is binding only if Dev pays an extra amount to enforce it
  4. DThe entire agreement clause generally makes it difficult for Dev to treat the earlier oral assurance as a term of the contract, though it may not defeat a claim based on fraud or a statutory rightCorrect
  5. The clause matters only if the contract was registered at a sub-registrar's office

Explanation

An entire agreement clause aims to confine the contract to its written terms, so earlier oral statements are generally not terms. It does not usually shield a party from fraud or override statute. So Dev would struggle to enforce the assurance as a term, although other claims might survive.

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