What Do I Need To Know About Boilerplate Clauses?

Boilerplate clauses are standard provisions that appear in virtually all business contracts and most people overlook. However, this does not mean that they are not important or that they do not have an impact on agreements. The purpose of boilerplate provisions is to protect the interests of all the parties that sign the contract.

Boilerplate clauses vary from contract to contract – which is another reason to pay close attention to them – but there are several common ones that you can find in nearly every business contract you read. In this article, you will learn what you need to know about boilerplate clauses and why overlooking them might be dangerous.

Understanding Boilerplate Clauses – Their Impact on Business Contracts

The boilerplate clauses you include in your business contract and the way you draft them can have a significant impact on your liabilities and rights under the contract. For example, you can draft an indemnification clause as a cross indemnity where both parties indemnify each other. However, it can also be a one-way indemnity where only one party agrees to indemnify the other. Simply signing off on these provisions without reviewing them carefully with the help of a business attorney can have severe consequences down the road in the event a dispute arises and the other party files a lawsuit. Although these clauses are standard and appear in nearly every business contract, you must always review every single provision to make sure you know exactly what you are agreeing to do.

Here is a list of the most common boilerplate clauses:

1. Indemnification Clause. This clause aims to specify which party will be responsible for litigation brought by a third party. This clause often serves as insurance for parties that hire contractors or other parties with whom they regularly do business.
2. Arbitration Clause. Arbitration is the most popular alternative to litigation when it comes to dispute resolution, which means there is a good chance your business contract will address this possibility. The arbitration clause could state that any dispute will be settled by arbitration and provide steps to determine, for example, whether the decision of an outside arbitrator will be binding.
3. Escrow Clause. Sometimes, it is best to hold compensation for a specific job in a special bank account while the work is still being completed. In a business contract, the escrow clause may also specify under which circumstances someone can have access to the escrow account.
4. Confidentiality Clause. This provision states that the parties cannot discuss certain business operations performed under the contract with outside parties. Another name for this is a non-disclosure agreement, which is very common, not only in business contracts but also in other types of agreements.
5. Notice Clause. In a business contract, the notice clause specifies the correct way to disseminate and deliver notices to the parties. When reviewing a business contract, you need to pay close attention to the notice clause, as it touches on many other clauses. To amend a contract, for example, the party seeking the modification must properly notify the other party.
6. Amendments Clause. This clause lays out the requirements and the process for validly modifying the original contract.
7. Force Majeure Clause. This clause exempts parties from adhering to the contract in the event an unforeseen situation radically changes things. Events of this kind include many types of natural disasters or anything that makes it impossible for the parties to adhere to the contract within the established timeframe.

Do Not Sign Yet! Give Us a Call – We Can Help You

When it comes to business contracts, the tiny details most people overlook can be the difference between a smooth transaction and a nightmare, and there are many tiny details in boilerplate provisions you need to consider before signing any contract. Do not run the risk of being stuck in a contract that simply does not work for you. We can take a look at any contract before you sign it to help you determine whether you are getting the most favorable deal. Call us today at (305) 921-0440 or send us an email to [email protected] to schedule an initial consultation.

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