What Are the Risks and Benefits of Boilerplate Contract Clauses? 

Boilerplate contracts are contracts featuring standard pre-drafted clauses. The term “boilerplate” comes from a long-ago time when manufacturing used steel plates for its boilers, and later the printing industry took on the word when it stamped text onto metal plates. 

Today, boilerplate contracts and boilerplate clauses are available online as free or low-cost templates, and they offer quite a few benefits such as efficiency and savings. Yet there are many situations in which a boilerplate contract may not be the best fit to protect a business legally. An experienced Naperville, IL business contract attorney can review your boilerplate agreement and advise you in the event you have questions about your boilerplate contract. 

What Are Some Common Boilerplate Clauses?

Notice

Details how the parties may contact one another to send notices for any reason related to the agreement, as well as the parties’ contact information to do so. 

Waiver

The parties agree that a failure to sue to enforce one provision does not waive the right to sue for future claims based on the contract. 

Severability

This clause is included to formalize the fact that if a court later finds one or more sections of the contract legally unenforceable, the parties agree that the rest of the agreement continues to be in effect and will not be void.  

Limitation of Liability 

Sets up limits to the types and amounts of damages for which a party may be liable under the agreement.  

Jurisdiction and Venue

This clause lays out which court the parties agree has authority to hear the case in the event of a dispute related to the contract. Venue, on the other hand, outlines the geographic location where the parties may submit to litigation. 

Choice of Law

A close cousin of jurisdiction, choice of law outlines which state (or country’s) laws may be used to interpret the contract in the event of a lawsuit. 

Confidentiality 

When the parties include a confidentiality clause, they bind themselves to keep certain information confidential. 

Indemnification 

The parties agree that one or the other will cover the costs of any contractual dispute brought by a third party.

Force Majeure 

Here the parties agree that certain obligations under the contract are suspended or canceled in the event of a major unforeseen manmade or natural event such as an act of war or hurricane.

Amendments

This clause specifies how the parties may formalize any amendments to the contract if they wish to amend it in the future. 

Assignment 

Lays out how the parties may transfer their rights or responsibilities to a third party under the contract. 

Attorneys’ Fees

Sometimes the parties will agree that the one who wins in a lawsuit has to pay the other party’s attorneys’ fees and costs. 

Arbitration 

When a contract includes an arbitration clause, it outlines when the parties must submit to arbitration and the details of that arbitration including procedures. 

Warranty

In a general warranty, a party promises that the goods or services it will provide will satisfy a certain standard.

Entire Agreement

This provision states that the current agreement is the entire agreement between the parties. It is meant to discourage a party from later stating that the parties agreed to additional terms not in the written agreement. 

What Are Some Potential Issues That Can Arise With Boilerplate Contracts?

There are potential issues that come with the use of boilerplate contracts:

Not Customized 

Boilerplate contracts are not tailored to the specific business needs of the parties. This can lead to gaps in protection and leave the parties vulnerable to liability. 

Unenforceable Provisions

A contract must comply with applicable law. Otherwise, it will be unenforceable. A boilerplate provision will be null and void if it is legally unenforceable, no matter what it says on the contract. For example, the parties may state that they have five years to sue on a contract for sale, but that section will be unenforceable and the parties will still only have four years to sue on such a contract per Illinois law. 

Conflicting Terms

Using boilerplate clauses can sometimes conflict with other customized terms of an agreement, creating confusion about which terms apply. 

Can I Change a Boilerplate Contract?

Whether the contract contains an error or business needs have changed, sometimes it is necessary to change or amend a boilerplate contract. Whether a party can do so and how will depend on whether the contract has already been executed, meaning signed by both parties. In that case, the parties may change the contract only if they both agree. They must amend the agreement in the way specified in the agreement if there is a provision governing amendments. In some circumstances, a party may file a claim with a court to change or reform the agreement on their own, such as if there was a mutual mistake in the agreement. 

What Happens to the Rest of the Contract if Part of It Is Unenforceable?

Generally, a contract will remain enforceable even if one section is deemed unenforceable. Usually, boilerplate agreements will contain severability provisions specifying just that. Even if they do not, a court will be reluctant to void an entire agreement merely because one section is not enforceable, especially if that section is not material or significant to the rest of the agreement. 

How Can I Use Boilerplate Clauses to Protect Myself and My Business?

If drafted by a thoughtful and experienced attorney, a boilerplate clause can protect you and your business. Boilerplate clauses offer consistency, which can be a helpful tool to avoid mistakes in your organization. Likewise, they can ensure that your organization complies with relevant laws and regulations. 

Contact a Naperville, IL Business Law Attorney

While boilerplate contracts can sometimes be a great tool, when your business requires tailored legal representation, experienced Naperville, IL business contract lawyer Denise Gierach can review your agreement. Attorney Gierach combines her management degree and experience as a business owner and as an attorney to advise her clients. Call the Gierach Law Firm at 630-228-9413 for a consultation today.