What Are Boilerplate Clauses?

If someone is talking about boilerplate clauses, they are referring to the general or standard clauses of a contract. These clauses are deemed “boilerplate clauses” because they are included in the majority of contracts in Australia. Most boilerplate clauses do not need to be heavily negotiated as they provide certainty on matters and are useful in interpreting the contract if a dispute arises. 

Boilerplate clauses are usually found towards the end of a contract and deal with the legalities of a contract rather than its subject matter. Although boilerplate clauses are standard in most contractual agreements, their inclusion should be considered on a contract-by-contract basis to ensure that all clauses are relevant to the agreement and parties. 

Why are they Important?

Although boilerplate clauses may seem like standard clauses that are included into a contract, there are several reasons why you should pay close attention to what boilerplate clauses are included in your contract:

• In the event of a dispute, courts will use boilerplate clauses to help interpret the contract; 
• They provide direction on how to manage the contract in terms of amendments, dispute resolution and communications;
• They outline the requirements you must fulfil from your contractual obligations;
• Both parties are able to save time and money as the boilerplate clauses specify the administration and management of the contract

Common Types of Boilerplate Clauses

Below is a non-exhaustive list of boilerplate clauses that are commonly included in most standard form contracts. 

Governing law

This clause allows parties to identify what laws will govern the contract. This is an important consideration as the law is applied differently in each country. This clause is directly related to the jurisdiction clause and should be read and included together. 

Jurisdiction

By defining which jurisdiction applies to the contract, parties can ensure that their interests are protected in the event of a dispute – this is relevant to ensure that the dispute does not fall within a jurisdiction that can be unfavorable to the contract. Parties should opt for non-exhaustive jurisdiction so that they are not limited to what jurisdiction their disputes can be heard in. 

Severability

When a clause in the contract is found to be invliad or void, this clause will allow parties to sever the clause without rendering the entire contract void. There may however, be cases where the severed clause is central to the commercial agreement, and this may cause further issues. Because of this, a severability clause may not be suitable for all contracts. 

Force majeure

This clause is used to outline the grounds for when a party can terminate or amend a contract if a party is unable to fulfil their contractual obligations due to an unforeseen event they cannot control. 

Entire agreement

An entire agreement clause establishes that the agreement made between the contracting parties is contained within the contract only, and that any prior dealings or agreements are superseded. 

Interpretation

This clause provides clear rules that should be applied when interpreting the contract e.g. whether headings in the contract can be interpreted. 

Counterparts

When parties are unable to sign a contract together, this clause enables parties to sign a separate version of the original contract (the separate contracts will be taken as a complete document thereafter). Parties must ensure they receive an actual copy of the entire contract to avoid any disputes regarding the enforceability or validity of the contract. 

Notice

The clause will usually cover two aspects of notice:

1. What is means to give notice
2. When to assume that notice has been given

Non-waiver / exercise of rights

By including this clause, parties recognise that their rights can only be waived explicitly. This will help the courts interpret the rights of parties during a dispute. 

Summary

Boilerplate clauses are important as they outline how a contract is managed and administered, especially in terms of amendments, interpretation and dispute resolution.

Although they are standard form clauses that are included into most contracts, not all boilerplate clauses may be relevant to an agreement so it is important to assess the applicability of the clauses before deciding if they should be included in your contract or not.