Whenever you have to create multiple contracts containing similar terms, provisions, and/or stipulations, a boilerplate contract or clause is the best asset to have.
But using such contract clauses is not just plug-and-play; you need to review them to confirm they fit the specific agreement scenario in terms of jurisdiction, wording, and other factors.
In this article, we’ll explain the concept of boilerplate contracts. We’ll also address the common applications of such agreements using real-world examples.
Key takeaways
- A boilerplate contract is a legal document that contains standard clauses that are universally applicable to contracts.
- You can reuse the same boilerplate clause or modify it slightly for various personal or commercial use cases.
- Using boilerplate contracts polishes your organization’s reputation and helps reduce costly inaccuracies that would hurt your business down the line.
What is a boilerplate contract?
A boilerplate contract is a document that contains generic sections that apply to standard agreements.
These sections are usually boilerplate clauses that are universally applicable to all forms of legal agreements.
How does a boilerplate contract clause work?
In business law, the term “boilerplate” refers to templated text that can be plugged into different contracts with few or no changes added.
Here is a sample scenario to help you understand the basic working principle of a boilerplate clause.
A law firm is hiring a software developer to build a website on WordPress.
To get this done, they need to give the developer access to the company’s data and other sensitive information.
When drafting the contract, the law firm can use a boilerplate NDA and tweak the wording instead of drafting one from scratch.
You can see boilerplate clauses in real-estate agreements, auto purchase contracts, employment contracts, loan applications, and end-user license agreements.
Examples of boilerplate contracts and clauses
The first boilerplate contract example that comes to mind is everyone’s all-time favorite: “I have read and agree to the terms and conditions…”
But this agreement clause is just a speck in the ocean of boilerplate provisions spanning several industries.
Let’s go through some standard clauses used in contract law.
Assignment clause
This clause clarifies whether all parties to the contract can assign rights to third-party actors. In most cases, the assignment clause prohibits the transfer of rights.
Example:
Neither Party may assign any of its rights or contractual obligations under this Agreement without the consent of the other Party, whose consent shall not be unreasonably withheld or delayed.
Jurisdiction clause
For contracts valid within a specific geographical location, you need to specify the governing law and the region of applicability in the fine print.
The jurisdiction clause appears in legal documents between companies located in different geographical locations (state or country) if both parties have to determine a choice of law.
Example:
This contract is valid under the provisions of New Jersey common law.
Force majeure clause
Force majeure refers to unforeseeable events that could prevent one of the parties from fulfilling their contractual responsibilities.
A force majeure clause specifies what should happen in this scenario.
Most contracts spell out the condition for force majeure in writing:
- Natural disasters
- Epidemics and pandemics
- Human-made conflicts (coups, revolutions, border disputes, state of emergency, wars).
Example:
If the agreement cannot be performed due to force majeure, the responsibility shall be exempted in part or in whole according to the influence of force majeure.
Dispute resolution
Also known as the mediation clause, this provision outlines how the parties to the contract should resolve their differences at every stage, from risk management, mediation, negotiation, litigation, to arbitration.
The dispute resolution clause gives the weaker party superior bargaining power to choose a suitable settlement mechanism.
The clause can also assign a mediating third party to resolve disputes without the court’s involvement.
Example:
A party to this contract may at any time give notice in writing to the other party of its intention to refer a dispute arising under the contract to adjudication.
Arbitration clause
As a variation of the dispute resolution clause, the arbitration clause specifies the agreed-upon legal process for conducting conflict resolution.
Example:
All claims and disputes arising under or relating to this Agreement are to be settled by binding arbitration in the state of Illinois.
Severability clause
In some cases, if one aspect of a standard contract is deemed invalid, it nullifies the rest of the contract.
But with a severability clause, only the invalidated parts become null and void. The rest of the contract remains valid and viable.
Example:
If any provision of this Agreement shall be held or made invalid by a court decision, statute, or rule, the remainder of this Agreement shall not be affected thereby.
Indemnification clause
Indemnity (indemnification) refers to compensation for liquidated damages resulting from performing roles outlined in an agreement.
This includes actual damages, attorneys’ fees, and other contract provisions.
With that in mind, an indemnification clause spells out the level of risk the indemnifying party is willing to take.
When a particular provision covers the indemnifying party from the consequences of negligence and misconduct, it becomes a “hold-harmless” clause.
Example:
The Company shall indemnify and hold Employee harmless to the fullest extent permitted by the laws of the Company’s state of incorporation in respect of any and all actions, claims, demands, and expenses.
No waiver clause
A no waiver clause prevents the parties to an agreement from waiving their contractual responsibilities according to state law.
Even if one of the parties signs a liability waiver pertaining to the contract, they won’t be exempt from legal action for negligence or breach of contractual provisions.
Example:
Nothing herein constitutes a waiver of any default under the Agreement, whether or not known to all parties.
Integration clause
Also known as a merger or entire agreement clause, this provision points out that the current iteration of the contract is the complete, final written agreement.
Example:
This Agreement contains the final, complete, and exclusive statement of the agreement between the parties, and all prior written or verbal agreements are merged herein.
Termination conditions
Severance or termination clauses mention a set of conditions that apply in order for both contracting parties to terminate the country mutually — or for one party to abdicate responsibility without legal repercussions.
Terminations fall under two categories:
- Termination for convenience (due to a change in needs or conditions)
- Termination for cause (due to the actions of the other party)
Example:
This Agreement may be terminated at any time with the written agreement of the Parties.
Confidentiality clause
A confidentiality clause, or non-disclosure agreement, restricts one party to a contract from sharing personal, business, or financial details related to the other signatory, their business, or even the contract itself.
NDAs are commonplace in Hollywood, Silicon Valley, politics, and every facet of human interaction that requires keeping privileged information secret.
Example:
The Parties agree not to disclose each other’s confidential information without the other Party’s prior written consent unless authorized by law.
Other boilerplate provisions include non-competes, non-solicitation clauses, employment benefits, release of liability, and warranties.
Why use boilerplate clauses?
Here are some of the benefits of boilerplate contract clauses for business and personal contracts:
- They speed up the process of drafting contracts and getting them signed.
- Boilerplate clauses ensure that the contract stipulations are written in legally binding and viable language, and without favor.
- They reduce the chances of errors and self-implication.
- Boilerplate documents give your business a professional, consistent look when working with multiple partners.
Furthermore, with modern software tools, you can save these boilerplate clauses in your content library and add them to contracts on demand.
Where do boilerplate contract clauses fall short?
The main issue with boilerplate contracts is that they lack personalization. You just copy-paste the same line(s) for every contract.
And with that comes a different problem.
Companies use contractual boilerplate language because they believe people won’t read the fine print. Who reads Ts & Cs anyway?
As a result, little attention goes toward tailoring the content of boilerplate provisions to specific scenarios, customer demands, and overarching authority.
Tips to make sure your boilerplate clause is legally binding
Boilerplate clauses put drafting and editing many contracts on autopilot, but your business can go into a tailspin if you don’t follow established best practices.
- Tailor and revise the provisions to make sure they are fair, fit for purpose, and non-ambiguous.
- Make a sincere effort to ensure the template you are using for your NDA, force majeure clauses, or other provisions meets the legal requirements of state or federal law.
- For individual contracts and other documents, always involve other signatories in the redlining process.
- Don’t use the fine print to cram in unfair conditions and stipulations. In extreme cases, a presiding judge can invalidate the contract and impose fines on your business if they deem the provisions unjust.
- For severability, mention the sections of the contract that remain valid or will be rendered invalid to avoid confusion and ambiguity.
Get personalized boilerplate contracts from PandaDoc
Now that you understand the standard boilerplate contract meaning, you can use it to save your business time and money by streamlining the process of drafting and editing contracts.
With a solution like PandaDoc, you get access to a vast library of customizable boilerplate contracts for different use cases.
Apart from that, you can use the PandaDoc editor to make changes and customize the standard form for each customer or prospect.
Afterward, you can assign signatories to review, approve, and sign the entire agreement using the eSignature tool, all from the same dashboard.
To figure out how PandaDoc can help you edit and store boilerplate contracts (and other documents), book a quick demo right away.
Disclaimer
PandaDoc is not a law firm, or a substitute for an attorney or law firm. This page is not intended to and does not provide legal advice. Should you have legal questions on the validity of e-signatures or digital signatures and the enforceability thereof, please consult with an attorney or law firm. Use of PandaDoc services are governed by our Terms of Use and Privacy Policy.
