Even though boilerplate provisions are commonly overlooked in contracts as standard non-negotiable clauses, they often establish essential rights and can be tailored to favor one party or the other. Before signing any contract, you should make sure you read and understand what these clauses provide for—and negotiate to change them if necessary.
What is a Boilerplate Provision?
"Boilerplate" is the term used to refer to certain standard clauses that usually appear at the end of a contract. These provisions cover the mechanics of how a dispute between the contracting parties will be resolved, such as who will pay attorney's fees, the proper venue for filing a lawsuit, and what law will govern in the event of a dispute.
Which boilerplate provisions are included and how they are drafted can have a significant impact on your rights and liabilities under the contract. For example, an indemnification clause can be drafted as a cross indemnity where both parties indemnify each other, or it can be a one-way indemnity where only one of the parties agrees to indemnify the other. You don't want to simply sign off on these provisions without reading them carefully because they can have significant consequences down the road if you end up in a dispute or lawsuit over the contract.
Standard Boilerplate Provisions in Contracts
Here are some common boilerplate provisions and what they generally cover. These provisions vary significantly, however, depending on the specific language used and items addressed in the clause.
- Choice of law. A choice of law provision determines which state's legal rules will be applied in the event of a lawsuit.
- Jurisdiction. A jurisdiction clause determines where (in which state and county) the lawsuit must be filed.
- Indemnification. With an indemnification, either or both parties agree that they will cover the costs of certain disputes related to the contract brought by third parties (that is, people who are not parties to the agreement).
- Warranties. These are promises or assurances made by either or both parties regarding various contract obligations.
- Confidentiality. This guarantees that either or both parties will not disclose certain information.
- Assignment. This affects the ability of one or both parties to sell or transfer their rights under the agreement to another party.
- 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.
- Limitations on damages. This sets a cap or otherwise limits the types of damages that may be awarded to either or both parties in a contract dispute.
- Force majeure. This clause establishes that the agreement will be suspended in the event of unforeseen disasters (such as earthquakes, hurricanes, floods, and so on).
- Attorneys' fees and costs. The parties agree on how and when attorney's fees and costs will be paid in the event of a legal dispute or lawsuit. (For more information, see Nolo's article Attorneys' Fees Provisions in Contracts.)
- Arbitration. The parties agree to resolve any disputes under the contract through arbitration proceedings, not in a lawsuit. (For more information, see Nolo's article Arbitration Provisions in Contracts.)
- Jury trial waiver. The parties agree to give up their right to a jury trial and have the case heard by a judge (if the dispute is in court).
- Severability. This permits a court to sever (take out) an invalid provision and keep the rest of the agreement intact.
- Attachments. This provides that attachments and exhibits will be included as part of the agreement.
- Escrow. This provision allows you to place payments into a special account which will be opened only under certain conditions.
- Notice. This describes how each party must provide notice to the other.
- 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).
- Headings. This clause provides that the headings used throughout the agreement have no special significance.
- Integration. This says that the written contract represents the final agreement of the parties.
- 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.