Boilerplate Bites… But You Still Need It

How often are you annoyed by all of the extra provisions (and sometimes pages) in your contracts? After all, you told your lawyer to throw together a “short” agreement for a “simple” deal with a supplier or a customer. Or, maybe it was an employment contract or a lease. The type of agreement doesn’t matter right now. What matters is that, in return, your attorney sends back a document with a whole lot of extra junk tacked on.

You probably don’t even read that stuff anymore. Maybe you never did.

But you need to keep business moving, so you tell the lawyer to finish the agreement, get it signed, and move along. It’s probably not worth your time or money to get into the weeds of all that mumbo jumbo anyway.

Yup, boilerplate at its best.

Well, what exactly is “boilerplate?” Think of it as legal jargon for those generic contract clauses you see time and time again (regardless of the type of contract).

These clauses often have headings such as “governing law,” “venue,” “dispute resolution,” “notices,” “amendment,” “no assignment,” “severability,” and “entire agreement.” While we’re at it, let’s include “indemnification,” “limitation of liability,” “disclaimer of warranties,” and “no third party beneficiaries.” Sometimes the contract simply calls them “miscellaneous” terms.

Have I put you to sleep yet?

No wonder you don’t read this stuff. These are not exciting topics, and they do not deal with the critical business points of your contract. This boilerplate stuff is boring, makes your head hurt, and looks suspiciously like a waste of ink (or storage space on your server). A waste, that is, until a deal goes sideways, and you need it.

We all know that business deals, like a lot of other things in life, do not always turn out as expected. By including boilerplate provisions in your contract initially, however, you can control potential liabilities, allocate risks, and provide dispute resolutions mechanisms if an issue arises later.

Let me pose a hypothetical situation to illustrate my point:

Suppose you are a software developer based in Michigan, and you license your product to a company in California. They agreed to pay you a license fee each month, but after a couple of months they stop paying you. They say the software is riddled with bugs and caused them a bazillion dollars of damages. You think your software licenses require arbitration of disputes in Michigan, but the other side is threatening to sue in California. You might have a few questions for your attorney as you decide what to do, such as:

– Can they sue, or do they have to arbitrate disputes?

– Where does that dispute resolution process happen? In Michigan, California, or some other state?

– Did we give some type of warranty on the software? If so, could we be liable for a bazillion dollars if the software is full of bugs?

Fortunately, you hired a sharp attorney who drafted an air-tight software license agreement, including some boring (but comprehensive) dispute resolution, limitation of liability, and disclaimer of warranty provisions that resulted in a slam dunk win for you. All that boilerplate used to annoy you, but you’ve recently had a little change of heart…

Keep in mind that boilerplate contract provisions and their substance can be, and frequently are, negotiated. Be sure to hire an experienced business attorney to advise you regarding your contract questions, including the legal effect of boilerplate provisions.

All information and other content on this site is for informational purposes only. It is not legal advice. You should not rely in any manner upon the information on this site or otherwise construe it as a legal opinion or legal advice. Consult with your lawyer regarding your particular issues and circumstances.

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