Boilerplate is generally thought of as the standardized or form language found at the end of a contract, and all too often it is mistakenly overlooked and treated as being of little or no real significance. Merriam-Webster Dictionary defines boilerplate as “Standardized text” and “formulaic or hackneyed language.” Hackneyed is defined as “not interesting, funny, etc., because of being used too often.”
While legal contracts may not be the most interesting or funny things to read, especially by the time you get to the last couple pages, it is a mistake to assume that any of the provisions or words used in a contract are standardized or of no real significance. The actual words used within such provisions can and do vary widely, as do the potential consequences of not reviewing and considering those words carefully. The types of provisions typically thought of as being “boilerplate” have headings such as “Assignment,” “Governing Law,” “Amendment,” “Severability” and “Counterparts.” Further compounding the misperception that these types of provisions are of less significance than other provisions of the contract is that they are often lumped together into one big paragraph at the end of the contract.
By way of example, the “Assignment” provision in most contracts is usually a short one to two sentence provision that has as its basic premise that no party to the contract can assign the contract to any third party without consent. However, even within these one or two sentences, the wording can vary widely. Does it state that the entire contract cannot be assigned without consent, or just that certain rights or obligations of a party to the contract cannot be assigned without consent? More significantly, does it state that consent from all parties to the contract is required for any type of assignment, or has one party reserved the consent requirement to itself?
One of the most important provisions of any contract is the “Governing Law” provision. It is one thing for a contract to provide that it is governed by a certain state’s laws, but it is quite another to include wording that also sets forth the “venue” or location where the parties are required to litigate any disputes involving the contract. Having a contract governed by New York law may not be problematic, but having to pay a New York attorney to litigate your contractual rights in a New York court may be.
The best practice is to carefully review the provisions at the end of a contract with the same level of scrutiny and consideration as those at the beginning.