Don’t Overlook So-Called “Boilerplate” Contractual Provisions
Boilerplate language in a standard business contract is an often used, somewhat derogatory term for language that is used and repeated over and over again in different kinds of business agreements. Because the language and the provisions are so standard, they are often overlooked. However, they can be important, and overlooking these provisions can lead to serious legal problems.
Common Boilerplate Provisions
Here are some common boilerplate provisions that you should never ignore in your business contracts:
- Indemnification – If another party asks for you to indemnify them in a business agreement, you are agreeing to defend the other party, and possibly pay any settlement or verdict, all out of your own pocket. In essence, you are agreeing to insure the other party against any one else who sues or makes a claim against them. Be very careful before signing any kind of indemnification provision in any agreement
- Notice – Many contracts have a provision that lists an address where each party can receive any kind of notice that is required in the contract. For contracts that may be long term, do not ignore this provision—you may want to provide an address that you know will not change through the years, so that you can ensure you receive any notice from the other side.
- Choice of Forum – In the event of a lawsuit, where can or will the case be filed? This becomes very important where the contracting parties live far away. Do you want to have to file a lawsuit in another state, with a court system or lawyers that you aren’t familiar with?
- Choice of Law – Regardless of where any lawsuit is filed, what law will the court apply? It may be advantageous for you to select the law of a state where that state’s laws work in your favor. Alternatively, you may want to choose a state whose laws you (or your attorneys) are familiar with. In the absence of this provision, the court will apply the law where the lawsuit was filed.
- Severability – What if a part of your contract is held to be invalid, unenforceable, or void? Is the whole contract void, thus taking away your right to enforce it? Or is just the unenforceable part void? Unless you specify, the court could invalidate your entire agreement if even a small part of the agreement is held to be unenforceable.
- Waiver – The parties’ course of action or history of dealing with each other can alter the terms of a contract. That means that if you “forgive” a breach of the agreement by the other party, you may never be able to enforce that breach in the future, unless you have language specifying that waiving one breach, doesn’t affect your right to enforce the breach in the future.