Utah Contractor Practice Exam

In contracts that include a "complete agreement" clause, what does this clause bind the parties to?

1. The owner agrees to pay for the completion bond

2. The contractor must supply a completion bond

3. The work must be completed by a certain date or incur liquidated damages

4. The contractor and owner are bound by the exact words of the document

The correct answer is: The contractor and owner are bound by the exact words of the document

The inclusion of a "complete agreement" clause in a contract indicates that the parties involved must adhere strictly to the terms and provisions as outlined in the document. This means that all prior agreements, understandings, or negotiations—whether oral or written—are effectively nullified. By binding the contractor and owner to the exact words of the contract, the clause emphasizes the importance of the written terms as the sole source of mutual understanding. This mechanism is crucial in ensuring that neither party can later claim that informal discussions or prior representations were part of the agreement. Thus, if a dispute arises, the focus will be solely on the written document rather than any preceding or informal agreements, providing clarity and legal protection to both parties.