A high-rise building owner signs a written contract with a company to maintain and service the building's elevators. The contract contains an integration clause stating it is the entire and final agreement. The company later discovers the elevators are significantly older than represented and attempts to force a large price increase. The owner refuses and hires another company at a cost between the original price and the demanded price. Is the owner’s refusal to pay the higher price defensible?

• A. Yes, because the statement relates to a contract defense.
• B. No, because the integration clause precludes reliance on prior representations.
• C. Yes, because misrepresentation warrants rescission.
• D. No, because there was a mutual mistake.

Answer: (A)

The main idea is that a misrepresentation in forming the contract can defeat enforcement of terms reached under that contract, even when there is an integration (full‑settlement) clause. An integration clause says the written contract is the whole agreement, but it doesn’t automatically bar a claim that the contract was induced by false statements. If the company misrepresented the elevators’ age, that fraud can give the owner a contract defense—making the higher price unenforceable or giving the owner a remedy such as rescission or damages. The owner’s decision to refuse the higher price and hire another company can be seen as enforcing that defense, rather than as a breach of a legally enforceable price term built on truthful facts.

In short, misrepresentation in inducing the contract undermines the demanded price increase, and the presence of an integration clause does not remove that defense. The idea that the integration clause precludes reliance on prior representations is not correct; fraud claims can still be used to defeat or rescind the contract. The other possibility, mutual mistake, doesn’t fit the facts here since the misrepresentation came from one party, not a shared mistaken belief.