Here is a quick look at boilerplate clauses, what they are and why we have them.
Boilerplate clauses are the terms we use most often in contracts. They regulate the operation of the contract and its parameters.
Boilerplate clauses set out things like the duration of a contract, jurisdiction, how it should be interpreted if there is a disagreement about its terms, whether the benefit of the contract can be transferred to another party, and whether the contract includes all of the terms between the parties.
They are often standard and not heavily negotiated. Despite this, they can be the most important terms in a contract because they govern lots of scenarios that are cause for disputes between the parties. A great example of this is an entire agreement clause which will tell the parties that they cannot rely on things that each party has said to the other (in emails, for example) that have been not included in the contract. A variation clause will tell the parties whether the terms of the contract can be varied and how.
Do I need boilerplates in my contract?
Boilerplate clauses govern many key aspects of a contract meaning that there is less scope for lengthy disputes between parties as to how a contract should be interpreted.
What if you don’t have boilerplate clauses in your contract? This can be okay in low value, low risk or short term contracts because there isn’t a need for some of the protections that these clauses can offer.
For example, in low risk contracts the transactions are so limited in commitment, that if something does go wrong, the quickest and cheapest solution would be to stop performance and not to invoke any terms of the contract.
Generally though, boilerplate clauses are a must. A case in 2010 involving Food Co UK LLP and Henry Boot Developments Limited provided a sobering reminder of how important boilerplate clauses are. In this case a developer successfully defended claims for misrepresentation brought by six companies that had leased units in the development. The boilerplate clause specified that in contracting with the developer no lessee had relied on any representation beyond those recorded in the contract. All claims were successfully excluded because of the clause. Good news for the developer, not such good news for the lessees.
In contracts that are high in value and high risk, it is so valuable to have boilerplate clauses in the contract to ensure that exposure to risk is minimised. There are many boilerplate clauses, however, not every contract requires them all. It is important when forming a contract to understand which clauses are effective and the purpose of their inclusion within a contract.
There may be circumstances where a boilerplate clause will not assist a party. The crucial thing with these clauses is that if they are not expressly included in a contract, they will not be implied.
Careful thought should always be given to these incredibly significant clauses