Boilerplate clauses – the devil is in the detail
In the light of the impact of Covid-19, Ian Timlin from Conexus Law, says companies should check the boilerplate clauses on all existing and future contracts to prevent costly business disruptions
Boilerplate clauses, also known as standard, miscellaneous or general clauses, are generally found towards the end of most contracts or commercial agreements. They are normally standard commercial terms that do not vary much from one transaction to another. Boilerplate clauses are often not typically heavily negotiated, but they are important. They often regulate the operation of the contract (i.e. its duration, interpretation, transferability, and enforceability) and many contract disputes depend on the drafting of boilerplate clauses such as termination, force majeure, and entire agreement clauses.
Understandably when people are using an existing contract, for example a supplier agreement, they concentrate on the operative terms and conditions of the agreement and pay less attention to these standard provisions at the end of an agreement. However, many contract disputes depend on the drafting of boilerplate clauses such as termination, force majeure, and entire agreement clauses. This is particularly important during Covid-19 for organisations who are struggling to deliver a contractual service as a force majeure clause might allow for the suspension of performance as a result, for example, of quarantine or other employee restrictions.
(Of course if you now entering into new contracts it is worth considering adding a clause that specifies a pandemic, epidemic, outbreaks of infectious disease or any other public health crisis restrictions as an event of force majeure.)
In addition, most boilerplate clauses clarify the relationship between the contracting parties. Generally, subject to statutory restrictions and illegality, the parties to an English law contract are free to define their contractual relationship between each other which can provide certainty if terms in the contract are ever disputed.
This is especially important given the strain that Covid-19 has put on relationships throughout the supply chain, with many businesses now looking at their financial and logistical obligations to third parties to prepare and protect their operations and staff.
As a result, it is also worth noting that boilerplate clauses are also changing. In a limited supply marketplace, it is always worth considering having a standard clause that forces your counterparties to a contract to mediate before court proceedings can be instigated by one party against another which can save time and money. It can also help salvage a business relationship before parties become entrenched in their positions as a result of court proceedings.
However, just re-hashing clauses and omitting properly thought out boilerplate clauses may create uncertainty and expose certain elements of the relationship or agreement between parties open to interpretation in a court of law, which is often an expensive and unpredictable exercise.
Finally, it is worth checking these clauses for another reason. They may assist you in your commercial aspirations - you may be pleasantly surprised by what is hidden there!