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COMMERCIAL CONTRACT VOCABULARY A-Z: B - BOILERPLATE CLAUSES

‘Boilerplate clauses’ are sometimes referred to as ‘miscellaneous clauses’. They refer to clauses which are ‘standard’ in many types of commercial contract. They are usually found towards the end of a written commercial agreement. In general terms, they regulate the operation of a commercial contract in several ways, including its:


· duration

· interpretation

· transferability, and

· enforceability.



Commentary


There are several types of clauses which fall under the category ‘boilerplate’. They include:


· assignment clauses

· governing law (‘choice of law’) clauses

· entire agreements clauses

· force majeure clauses

· jurisdiction clauses

· set-off clauses

· termination (and ‘break’) clauses

· waiver clauses.


There are certain issues in relation to boilerplate clauses that you should keep in mind.


1. Because they are sometimes called ‘standard’ or ‘general’ clauses, it is tempting to see them as less important, even by some practising lawyers. This is a mistake. One example should make this very clear.


In March 2020, much of the world began imposing various restrictions on both the citizens and businesses. These restrictions included those on movement and (as we saw in the recent UK Supreme Court case of FCA v Arch Insurance [2021] [ which we considered in a blog post on January 19th 2021, here: https://www.cambridgelegalenglish.com/post/supreme-court-uk-hands-down-judgment-in-business-interruption-appeal-fce-v-arch-insurance ] and also on business operations. Any disruption of business operations will, almost inevitably, have several consequences, including, possibly, being unable to perform a contract. In the past few months, commercial lawyers have been regularly dealing with issues arising out of this problem and, in particular, the issue of force majeure clauses – which are, as we saw, a ‘boilerplate clause’.


2. They should never simply be treated as ‘second-class’ clauses and simply incorporated into a commercial contract without real consideration about what role they are to play in the operation of the contract as a whole. Every clause in a commercial contract should serve a meaningful purpose – particularly in relation to risk allocation and risk management within the wider context of the contract.


3. They should never be inserted into a contract from a ‘template’ or precedent clause. You should always consider whether the wording of every clause is appropriate for the contract you are drafting – which, of course, will be different in every case. It is tempting to simply ‘cut and paste’ clauses, especially boilerplate clauses – in order to save time and money. This is a most dangerous practice.


4. It is tempting to study boilerplate clauses individually without any consideration about how they might affect other clauses in the contract (including other boilerplate clauses).

This approach to studying boilerplate clauses is not surprising. An academic study of contract law, for example, often seems like the study of separate ‘themes’ or topics within contract law: formation (offer, acceptance, etc), express terms, implied terms, limitation clauses, misrepresentation, frustration, remedies, etc. However, in practice, it is very rare to look at contract issues – particularly in a dispute – in this kind of way. In fact, categorisation becomes a positive disadvantage.


It is always helpful to remember that when studying boilerplate clauses (and other types of typical contract clauses) that you should always ask yourself how a clause might interact with other clauses in the contract. This becomes particularly important in the early stages of a contract negotiation, when, for example, issues such as ‘price’ and ‘delivery’ might seem to be the most important matters under discussion.


A contract is not a dry document with separate clauses which stand alone from each other. It is a living document in which the separate clauses may, and often do, interact with each other. The sad thing is that often this is not fully understood until a dispute arises and some kind of dispute resolution procedure is required to resolve it. This can be, in some cases, a very expensive lesson to learn.


© Cambridge Legal English Academy 2021



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