Final answer:
The phrase 'all matters in an agreement are merged or extinguished on closing' reflects the merger doctrine in contract law, meaning all prior negotiations and agreements not included in the final written contract are considered merged into it and extinguished upon closing.
Step-by-step explanation:
When it is said that "all matters in an agreement are merged or extinguished on closing," it refers to the legal principle known as merger doctrine in contract law. This principle indicates that once a contract has reached closing, or when the final agreement is executed, all prior negotiations, understandings, and agreements that are not explicitly stated in the final executed contract are considered to be merged into that contract. Consequently, those prior matters are extinguished and no longer enforceable separately from the contract.
This principle ensures that all expectations of the parties are contained within one document, which is the final written agreement, thus providing clarity and finality to contractual obligations. For example, if there are preliminary agreements or promises made during the negotiation phase that are not included in the final contract, those preliminary matters will not be legally binding once closing has occurred.