Whether or not to use boilerplate language in a contract is a question that is often considered in contract negotiation. However, it can be difficult to determine what the best boilerplate language is to include. There will also be situations where one of the parties is unaware of what boilerplate language is and how it will affect the contract. Understanding what boilerplate language is will help determine whether the terms in an agreement should be negotiated or if a boilerplate agreement will be the best option for the remaining terms. There are also important considerations for using boilerplate language because the language will still have legal implications, even if it is the language that is used frequently. This article will examine the definition of boilerplate language, provide some examples, and walk through the consideration for using boilerplate contracts.
Boilerplate Contract Defined:
Boilerplate language is the language that is not written by the parties or specifically bargained for, but language that is included in many contracts of the same kind. These are often included at the end of the contract and include some general terms that will be discussed shortly. They are often paragraphs concerning applicability and enforceability that include a host of legal jargon for the parties to solidify the contract. This language is pulled from other similar contracts and gives the parties language to use or a jumping-off point for more discussion. Many contracts will copy and paste this language in without changing anything in the paragraphs, but the items in these clauses have been litigated heavily and are typically interpreted in the same or a similar way. For example, a landlord will typically use the same exact lease for every person that lives in their building, so almost all the terms will be boilerplate.
Examples of Boilerplate Language:
Several standard boilerplate language templates can be used to add the terms into an agreement. Some of these terms include:
- Arbitration: The choice of arbitration as the governing course of action in a contract is a prime example of boilerplate language. Companies will often throw the same arbitration clause across multiple contracts to ensure that they do not get sued in court.
- Assignment: An assignment term will either allow or disallow the parties from transferring their interest in the contract to another.
- Attachments: Occasionally, a contract will have attachments that serve as evidence or exhibits in the contract. There will often be a reference to the attachments in the contract that includes them in the overall contract.
- Attorneys’ Fees: This is often in contracts that anticipate litigation or issues, but the parties can decide how attorneys’ fees will be allocated. There are several scenarios, and most choices will be written in boilerplate language.
- Choice of Law: This is one of the boilerplate terms that should be examined to determine if it is correct for the agreement. The parties are able to choose which state’s the law they would like to apply in the event of a lawsuit. There will often be benefits and drawbacks of each that will have lasting effects on the parties, so determining the choice of law is an important aspect of a contract and should be negotiated fully.
- Confidentiality: This type of agreement will usually mean that the parties are barred from discussing certain aspects with others. This will be included in the boilerplate language because it is included in many contracts in some capacity.
- Counterparts: This is a provision that allows the parties to sign copies of the agreement without everyone being present in one place at one time.
- Damage Limitations: This is boilerplate language that caps the damages either party could recover in a contract dispute.
- Escrow: An escrow provision is common in real estate contracts, but it is a term that sets up an escrow account that will only release funds once certain conditions are met.
- Force Majeure: With every contract, there is a risk that certain aspects may not be able to be carried out because of natural disasters and other unforeseen circumstances. This clause allows the parties to be relieved of their duties if it becomes impossible to complete them.
- Headings: Many contracts use boilerplate language to state that headers in the contract have no special significance.
- Indemnification: Indemnification is an important provision to consider when looking at a contract because it covers which of the parties are responsible in the event of a suit against the persons in contact by a third party.
- Integration: Occasionally, one party to the contract will state that they did not agree to the same terms. Integration is a boilerplate term that states that the contract is the final agreement of the parties.
- Jurisdiction: In addition to choosing the law that applies in the event of a dispute, the parties will also need to assign jurisdiction to the contract where the suit can be brought.
- Liquidated Damages: In some cases, the parties will need to agree that if a certain action happens under the contract, the other party is entitled to a set amount of damages. This is most often in cases where the damages would be hard to calculate, but they cannot be used as a penalty.
- Notice: Notice is a legal idea that gives both parties the right to know about the court hearings that are happening and other important aspects of the contract. There will often be boilerplate terms about how and when the parties need to give notice.
- Relationship: This will be the language the defines the relationship between the parties in a business deal.
- Severability: Courts are reluctant to declare the entire contract invalid; however, they will usually declare portions invalid if they violate contract law or were created under a certain list of exceptions. A severability clause allows a judge to declare a portion of the contract invalid without invalidating the whole contract and is present in almost every contract.
- Waiver: Waiver is an agreement to release certain rights under the contract. This is usually around a specific cause of action that could arise under the contract and will often allow the party to pursue such claims at a point in the future.
- Warranties: Warranties are the guarantees between the parties for certain actions and obligations in the contract.
Many contracts will have most, if not all, of these boilerplate options. They give the parties some building blocks to help create terms that work for them and help the contract remain enforceable.
Considerations When Using Boilerplates:
Many benefits can be found by using boilerplate language. The terms are easy to use, give the parties a place to start, and have been tested by courts in the past. They are also helpful to prevent mistakes and ensure that documents are correct. It is also helpful that these terms will determine how a dispute from the agreement is resolved, so the parties will have a clear picture of what will happen before they even enter into the contract. Finally, they help companies ensure that there is little or no deviation between contracts with different people. On the other hand, boilerplate is rarely tailored to the specific needs of the parties. The parties will simply negotiate some sort of terms for each section and “fill-in-the-blank” with the terms. Another downside is that when a contract is being signed, many people do not read the fine print and are then bound to terms that they did not read and probably did not negotiate for. This can skew the terms toward the party who wrote the contract, which often results in further fighting between the parties. Boilerplate language can be incredibly beneficial in covering all aspects of a dispute that may arise under a contract. However, it is incredibly important to review each term and negotiate when needed to get terms that are agreeable by both parties. Finding a way to create a contract that is complete and fully voluntary is essential to a good partnership.