Standard Clauses In A Contract: Everything You Need to Know
Understanding standard clauses in a contract can make or break your business when it comes to the possibility of litigation3 min read
Standard Clauses in a Contract
Understanding standard clauses in a contract can make or break your business when it comes to the possibility of litigation. Clauses have to be included in a contract thoughtfully and carefully to ensure that all parties are protected.
What Is a Contract Clause?
A contract clause is a certain section or provision in a contract. Every clause will discuss different parts of the overall subject matter of the contract. The goal of a contract clause is to define the rights, privileges, and duties that all parties have within terms of the contract.
Clauses can be in different places in the contract, but they are generally at the end of the contract. They can take different forms and can encompass a variety of interests in the business and commercial aspects.
One example is the nondisclosure clause in a contract for employment. In this agreement, the employer promises to not disclose any personal information held up by the business. A contract clause is enforceable under federal and state laws.
Using clauses will depend on all the needs of the parties involved. Some clauses are used more often than others. Boilerplate clauses can appear throughout a contract. You can also create any specific clause that is pertinent to all parties involved.
What are Boilerplate Provisions?
Boilerplate refers to any language in a contract that is standardized. They’re typically grouped together. Boilerplate provisions have little in common with each other except that they do not have a place in other parts of the agreement. Because of this, they are typically seen towards the end of the agreement under a miscellaneous or general category.
Although a boilerplate provision is usually seen at the end of an agreement, the provisions are important. They can have a profound impact on dispute resolution and how the court will enforce a contract. The most noticeable effects of boilerplate provisions are when they are left out of a contract.
The following are examples of boilerplate provisions:
- Attorneys’ fees and costs. If a legal dispute occurs, the losing party must pay the winning party’s legal costs. It’s important to consider if both parties are equally in a position to pay legal fees based on the cost of the litigation. An attorneys’ fees clause can either be helpful in a dispute or can be used to discourage the other party to see redress in court should a dispute occur.
- Arbitration. Disputes about the contract have to be resolved in arbitration rather than a lawsuit. Arbitration can be costlier than litigation and is not always ideal for small claims.
- Choice of law. If a dispute happens, a choice of law provisions determines what state rules apply. They must also agree that litigation only happens in certain jurisdictions. This can only be enforced if they do not conflict with any requirements of the law.
- Jurisdiction. A jurisdiction clause will determine where a lawsuit must be filed in the event of a dispute.
- Waiver. A waiver clause allows the parties to give up a right to sue for any breach of a certain provision while not giving up claims pertaining to it in the future. This is used to make sure that the rights of a party will not be removed if there is an omission or delay in enforcing them.
- Non-waiver clause. This clause will protect the party that excuses other parties if there are any issues in performance within the terms of the contract. An example includes if one party only makes sporadic payments when the contract specifies payments on a monthly basis. If the other party accepts these payments but chooses not to file a lawsuit, the non-waiver clause will permit them to recover those payments later. They are not waiving their rights under the contract by accepting the payments late.
- Integration. Integration clauses state that a written contract will represent the final agreement with all parties involved.
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