Boilerplate Clauses: Everything You Need to Know

Boilerplate clauses are standard, ready-made, generic, reusable, legal clauses that are usually found at the bottom of a written contract (sometimes as fine print).

Ignoring Boilerplate Clauses Can Result in Trouble

Sometimes, the written terms or conditions of a contract are overwhelmingly lengthy. As a result, people end up agreeing to unfavorable terms or conditions without reading them thoroughly. It's, however, strongly advised that you thoroughly review the details of a written agreement when you enter into a contract with another party.

Don't Think They're Not Important

Boilerplate provisions, which are standard components of contracts, protect the interest of the parties involved in a contract. Boilerplates are usually grouped together, but they mostly don't share a lot of common ground with one another. They're put together at the bottom of a contract because that's where they fit best. You'll normally find them under such titles as “Standard,” “Miscellaneous,” or “General.”

Though virtually every contract has a boilerplate clause, there are variations in the legal wording of the clauses. They aren't perceived as being of equal importance as other terms of the contract, but they're no less important. Boilerplate clauses help parties better define their relationship because they provide clarity when a dispute arises.

Omitting Boilerplate Clauses Can Backfire

If boilerplate clauses are deliberately omitted from a contract, they'll be missed most when things go wrong. For example, if a contract doesn't provide a boilerplate clause that covers awarding attorney's fees to the winner of a lawsuit or a breach of contract happens, the contending parties will have a hard time finding lawyers to hire. They also come with advantages such as protection against expensive legal fees, protection against unforeseen circumstances beyond the parties' control, and so on.

A List of Boilerplate Provisions and What They Mean

Below are some boilerplate provisions and their meanings:

• Cost and attorneys' fee: The legal fees paid by the loser of a lawsuit for the winner.
• Arbitration: Resolving a disagreement without legal action. This is a clause that can save legal fees for you because, during a dispute, an independent arbitrator is available to look into disputes and decide compensation.
• Choice of law: This is the law of a chosen state applied to a lawsuit.
• Jurisdiction: This clause states what country and state a lawsuit must abide by.
• Waiver: This is the right a party retains not to take legal action against a defaulting party while maintaining the right to do so should the other party default at some point.
• Severability: This means instead of completely terminating a contract, only removing the invalid clause or rendering unenforceable by a court while the unaffected parts of the contract stay intact.
• Integration: This is also known as entire agreement clause. It states that the contract is the complete agreement of all contracting parties concerning the subject of the contract.
• Attachment: This states that the contract will include exhibits and attachments.
• Escrow: This allows a party to keep payments, business secrets, and other contract-related valuables in the custody of a qualified third-party that allows access to them only after meeting certain conditions.
• Limitations on damage: This determines what kinds of damages a contract is liable to award in case of a dispute.
• Warranties: These are the promises of parties concerning various contractual duties.
• Indemnity: This is the guarantee by one party that it will take care of the cost of certain challenges by third parties who aren't parties to the contract.
• Confidentiality: This states that parties won't reveal certain information.
• Announcement: This defines how parties should communicate public information concerning the contract such as an expected merger or a joint venture.
• Counterparts: This is when a separate, physical copy of a document, other than the one signed by other parties, gets signed by a party. This is an exact opposite of when the same copy of a document gets signed by all parties.
• Amendments: This is a clause that protects parties from having a contract amended without their consent. It states that a contract is only amendable only after the written consent of affected parties.

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