Common Boilerplate Provisions in Contracts
A look at some of the standardized language you'll find in many contracts.
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The term "boilerplate" refers to standardized language in contracts. Although often grouped together, boilerplate provisions don't have much in common with one another except that they don't fit anywhere else in the agreement. For that reason, they are usually dumped at the end of the agreement under a title such as "Miscellaneous," "General," or "Standard."
Even though boilerplate is buried in the back of the agreement, these provisions are important. They affect how disputes are resolved and how a court enforces the contract. The effect of boilerplate is most often noticed when it is omitted from a contract -- for example, if a contract doesn't include a provision awarding attorneys' fees to the winner of a dispute and there's a breach (violation) of the contract, it may prove tough for either party to find a lawyer willing to take the case.
Let's look at some common boilerplate provisions and what they mean.
- Costs and attorneys' fees. In the event of a legal dispute, the party that loses must pay the winning party's legal fees. (For more information, see Nolo's article Attorneys' Fees Provisions in Contracts.)
- Arbitration. Any disputes about the contract must be resolved through arbitration proceedings, not in a lawsuit. (For more information, see Nolo's article Arbitration Provisions in Contracts.)
- Choice of law. In the event of a dispute, a choice of law provision determines which state's legal rules will be applied in the lawsuit.
- Jurisdiction. In the event of a dispute, a jurisdiction clause determines where (in which state and county) the lawsuit must be filed.
- Waiver. This permits the parties to forego or give up the right to sue for breach of a particular provision of the agreement without giving up any future claims regarding the same provision.
- Severability. This permits a court to sever (take out) an invalid provision and still keep the rest of the agreement intact.
- Integration. An integration clause says that the written contract represents the final agreement of the parties. Often, it explicitly states the any prior agreement or discussions of the agreement are replaced by the written contract and that any further modification to the contract must be in writing.
- Attachments. This guarantees that attachments and exhibits will be included as part of the agreement.
- Notice. This describes how each party must provide notices to the other (for example, to terminate the agreement).
- Relationships. This prevents either party from claiming a business relationship with the other (for example, by stating that the parties are partners or that one is the other's employee).
- Assignment. This affects the ability of the parties to sell or transfer their rights under the agreement to another party.
- force majeure (pronounced fors- mazhoor'; also referred to as "Acts of God"). This clause establishes that the agreement will be suspended in the event of unforeseen disasters (such as earthquakes, hurricanes, floods, and so on).
- Headings. This clause provides that the headings used throughout the agreement have no special significance.
- Escrow. This provision allows you to place trade secrets, payments, or other information into a special account which will be opened only under certain conditions.
- Jury trial waivers. This establishes that when there is a court battle over the contract, the parties agree to have the dispute heard by the judge and to give up their right to a jury trial.
- Limitations on damages. This sets a cap or otherwise limits the types of damages that may be awarded in a contract dispute.
- Warranties. These are promises or assurances made by each party regarding various contract obligations.
- Indemnity. In an indemnity provision, one party guarantees that it will cover the costs of certain disputes brought by third parties (that is, people who are not parties to the agreement).
- Confidentiality. This guarantees that the parties will not disclose certain information.
- Announcements. This establishes the manner in which the parties can make public disclosures about the subject of the contract, such as statements about a forthcoming merger or joint business venture.
- Counterparts. This sets forth the right of the parties to execute (sign) copies of the agreement without everyone being present in one place at one time to sign them all.