When a new commercial agreement is signed, the entire agreement clause is often assumed to have settled any question about what came before. The clause states that the new contract supersedes everything that preceded it and the working assumption is that this draws a clean line. Prior arrangements, earlier contracts, informal understandings: all of it falls away.
That assumption is worth examining more carefully, particularly where the parties have an existing binding contract and the new agreement is intended to change or replace it. A High Court decision from November 2024 provides a useful illustration of where the assumption can break down, and why the drafting deserves more attention than it typically receives.
Varying a contract is not the same as superseding it
The starting point is a distinction that is easy to overlook. Varying a contract means changing its terms. Superseding a contract means replacing it. The two are related but they are not the same thing, and the word “supersedes” in an entire agreement clause does not automatically achieve either one with certainty.
Where parties have an existing contract and want to change what it requires, that contract will usually specify how any variation must be made. A clause requiring variations to be agreed in writing and signed by both parties is a common example. The effect of such a clause, confirmed by the Supreme Court in Rock Advertising Limited v MWB Business Exchange Centres Limited [2018] UKSC 24, is that an oral agreement to vary the contract will not be effective, even where both parties accepted it had been reached. The formality required by the contract must be observed.
This matters when considering what “supersedes” language in a subsequent agreement can achieve. If the earlier contract required a formal, signed variation to change its terms, a later document that simply states it supersedes the earlier one may not satisfy that requirement. Whether the earlier contract has been effectively varied will depend on whether the new agreement was reached in the way the earlier contract demanded, not on the breadth of the supersession wording used.
When supersedes does not mean extinguishes
A further difficulty arises where the new agreement is intended not just to vary the earlier contract but to replace it altogether. Here too, “supersedes” language may not do the work that parties expect.
In Capgemini UK Plc v Dassault Systemes UK Ltd [2024] EWHC 2728 (Comm), two technology businesses were engaged on a project to build a logistics planning tool for Royal Mail under a detailed Prime Contractor Agreement. A dispute arose, and the parties entered into a Settlement Agreement[VR1] to resolve it and set out how the remaining work would proceed. The Settlement Agreement contained a standard entire agreement clause stating that it “supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter.”
When further disputes followed, Capgemini argued that the entire agreement clause had extinguished the original Prime Contractor Agreement entirely and Dassault could no longer rely on the rights and protections it contained. The court rejected that argument.
The judge’s view was that entire agreement clauses of this kind are primarily designed to prevent parties from relying on informal discussions or pre-contract communications as if they formed part of the deal. They are not generally intended to abolish a separate, formal, binding contract between the same parties. The subject matter of the Settlement Agreement was the settlement and the way forward in relation to the matters in dispute, not the project as a whole. The Settlement Agreement was silent on a number of important matters covered by the original contract, including intellectual property and confidentiality. It made no commercial sense to read the clause as having quietly removed those protections. Where the Settlement Agreement covered something, the entire agreement clause prevented either party from arguing that its meaning was altered by something agreed elsewhere. But where it was simply silent, there was nothing to supersede and the original contract continued to apply.
What this means in practice
Taken together, these cases point to the same underlying issue. “Supersedes” wording in an entire agreement clause has a recognised purpose and scope. It is not a flexible tool that can be relied upon to vary a prior contract, override its formal requirements or extinguish it entirely, depending on what a party later needs it to do.
For businesses entering into any new agreement that relates to or builds on an existing one, the drafting question needs to be addressed directly with express words. If the intention is to change specific terms of the earlier contract, the new agreement should identify those terms and change them in the way the earlier contract requires. If the intention is to bring the earlier contract to an end entirely, the new agreement should say so in plain terms. If certain provisions of the earlier contract are intended to survive, those too should be identified.
A standard entire agreement clause will not reliably resolve any of those questions on its own. The Capgemini case is a reminder that where the answer is left to boilerplate language, the outcome may not be the one the parties had in mind, and establishing what was actually intended can become an expensive question to answer.
[VR1]Don’t think this will be the appropriate cross reference here because the type of compromise or settlement agreement between entered into between an employer/employee is not the arrangement being entered into in this case between two commercial parties to agree how they will deal with certain points in dispute.
