Do You Know What's in Your Boilerplate Provisions? (Hint: You Should)
Risk & Compliance
As the name indicates, “boilerplate provisions“ are legal clauses in a document that rely on “boilerplate“ language, often varying little between different contracts.
However, the term “boilerplate“ doesn't imply that this topic is to be taken lightly. In fact, not paying full attention to the language inside boilerplate provisions can be highly costly in terms of unpleasant surprises down the road. In this article, we'll discuss what boilerplate provisions are and why they can actually make or break a contract.
What are boilerplate provisions?
“Boilerplate provisions” are clauses using standardized, ready-made language that are typically included at the end of the contract.
Although grouped together, boilerplate provisions usually don’t have much in common. They are frequently located under a heading with a label such as “Miscellaneous,” “Standard,” or “General.”
Why are boilerplate provisions important?
The purpose of boilerplate provisions is to protect the interests of both parties signing the document. For example, if a contract doesn’t include a boilerplate provision guaranteeing attorney’s fees to the winner of a lawsuit, few legal firms will be willing to take the case on in the event of a breach of contract.
Because these boilerplate provisions are often cited during a legal dispute, it’s best not to deviate too far from the language they contain, which has been carefully crafted and refined. Using boilerplate provisions in your contracts can also save you a great deal of time and effort if your situation doesn’t require drafting special terms and conditions.
If you need help getting started with boilerplate provisions, there are a variety of sample clauses available online whose language you can modify as necessary.
What are the most common boilerplate provisions in a contract?
Below are some common types of contract boilerplate provisions:
Arbitration clause: This clause stipulates the ways to resolve a dispute without resorting to legal action by appointing an independent arbiter. Including an arbitration clause can save your organization a great deal of money in legal fees.
Choice of law clause: This clause defines the applicable jurisdiction(s) for any lawsuits that arise due to the contract. Choice of law clauses are especially important for situations where the parties are not all located in the same state or country.
Entire agreement clause: This clause establishes that the current document represents the entire agreement between the parties. In particular, the entire agreement clause overrides any previous agreement between the parties, unless the terms of that agreement are also included in the current document.
Force majeure clause: This clause provides for the temporary suspension of a party’s liabilities or obligations if an extraordinary event or act of God occurs. Examples of a force majeure would be natural disasters, wars, electrical blackouts, and general strikes.
Indemnity clause: This clause requires the parties to compensate each other for any loss, harm, or liability as a result of the contract. For example, if a company is sued for copyright infringement based on work that a freelancer has done for them, the freelancer must cover the company’s costs of the lawsuit.
Limitations on damages clause: This clause places an upper limit on the damages that may be awarded to a party in a lawsuit due to breach of contract. In particular, many such clauses restrict parties from claiming “consequential, incidental, indirect, punitive, exemplary, or special damages.”
Severability clause: This clause states that if any part of the contract is found to be invalid or unenforceable, the remainder of the contract will remain in force. Some severability clauses allow the parties to rewrite the invalid clause to make it valid.
Waiver clause: This clause outlines how the parties can legally agree to give up their rights or interests as defined in the contract. For example, the waiver clause may use an “affirmative waiver,” which states that a party’s failure to enforce one of its rights under the contract does not imply that it has waived that right.
The Buyer's Guide to Contract Management Software
Quickly identify solutions to your specific contract management challenges.
Meet Tara Naughter, Marketing Campaign Manager at ContractWorks