Boilerplate Clauses In Commercial Contracts: Everything You Need to Know
Boilerplate clauses in commercial contracts are standard clauses that are usually found in all commercial agreements. 3 min read
2. What Is a Boilerplate Clause?
3. Types of Boilerplate Clauses
3.1. Assignment Clause3.2. Integration Clause3.3. Force Majeure Clause3.4. Confidentiality Clause3.5. Amendment Clause3.6. Severance Clause
Boilerplate Clauses in Commercial Contracts
Boilerplate clauses in commercial contracts are standard clauses that are usually found in all commercial agreements. Such commercial contracts can be either simple or very complex in language. Regardless of how detailed the contract is, however, there are various boilerplate clauses that can be used in commercial agreements, which are included to protect the interests of both parties involved in the contract.
What Is a Boilerplate Clause?
The clause itself usually doesn’t fit in with the overall information included in the contract. It’s generally a miscellaneous section that will include general information, such as what happens in the event of a legal dispute, how attorney’s fees will be paid, where the venue will be if a lawsuit does arise, etc. Such information is included at the very end of the contract. While it isn’t mentioned until the end of the agreement, it is one of the most important clauses that most people don’t pay much attention to.
Types of Boilerplate Clauses
There are several types of boilerplate clauses that a party can add to the contract, including but not limited to:
- Assignment clause
- Integration clause
- Force majeure clause
- Confidentiality clause
- Amendment clause
- Severance clause
This clause will specifically indicate that the terms under the contract cannot be assigned to another party. It will first indicate that the parties warrant to one another that they haven’t assigned any rights or duties under the contract to a third party. It will then go on to indicate that the clause restricts the ability of either party to subcontract their duties under the contract. For example, a lease contract might provide that the leasee cannot sublet his or her apartment to a third party, even if that third party agrees to submit a monthly lease payment to the landlord.
The purpose of this clause is to simply integrate all other statements, representations, and agreements into the contract, which will be the final legally binding agreement. For example, if the landlord promised you orally that he would fix the broken window, but the lease contract itself doesn’t provide such information, then the integration clause will protect the landlord. Therefore, the landlord need not actually repair the broken window.
Force Majeure Clause
Force majeure, also referred to as an act of God, is a clause that indicates the contract can’t be performed due to an unforeseen set of circumstances, which could include a weather-related event. For example, if a home builder enters into an agreement with a home buyer to build a new home on that owner’s land, then the home-building business should include this clause. If a hurricane, flood, tornado, or some other unforeseen weather-related event occurs, the home-building business cannot continue building the home during that time. Therefore, the builders cannot be sued for breach of contract, as this clause protects them.
This is a common clause that is included in a lot of commercial contracts, particularly if one party if providing confidential information to another party. Such an example is where one party provides trade secret information to another party, expecting that the other party will not disclose such information that it becomes aware of.
This clause will indicate that the contract can only be amended upon entering into another written contract that is signed by both parties. While this clause isn’t required in a contract, it could be beneficial, particularly for a construction project wherein the project and scope of the work aren’t concrete. Therefore, if additional materials are required, more time is needed, or additional costs arise over the course of the construction project, both parties will be aware of the fact that any new terms and provisions must be in writing and signed by both parties.
This is one of the most important boilerplate clauses in a commercial contract. The purpose of the severability clause is to indicate that if any provisions are deemed void or invalid, the entire contract is not also deemed unenforceable. Rather, only that term or provision will be removed from the overall contract.
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