“Boilerplate” Language: Last in the Series

The last couple of months we discussed two key “boilerplate” provisions often found in business contracts: the attorney fee clause and the arbitration clause.  I’d like to close our discussion of boilerplate with a brief overview of some of the other items you may see.

Choice of Law: Some contracts contain a provision stating which state’s laws will apply in the event of a dispute.

Venue: A provision stating where the lawsuit must be filed.  Note that this is different from the choice of law clause, above.  It’s possible to have, for example, a lawsuit in an Alabama court applying California law.

Both of these clauses are important, for different reasons.  Laws differ from state to state, so choosing which law to apply can change the outcome of a dispute.  But having to travel across the country to file (or defend) a lawsuit can sometimes be an insurmountable hurdle regardless.

Integration: A clause stating that the written contract is the “final word” on the agreement of the parties.  Meaning that any discussions you’ve had before the contract effectively don’t exist: if it’s not in the document, it’s not enforceable.

Counterparts: Often, it’s not practical or possible for parties to get together physically and sign the same piece of paper.  This provision allows you to each sign your own copy, and the combined documents together form the contract.

Indemnity: One party agrees to cover the costs of the other party in the event of a dispute.  These clauses should be read carefully so you understand the exact scope of your promise and how much risk you’re taking on.

Jury Trial Waiver: This gives up, in advance, the right to a trial by jury.  Instead, any lawsuit will be decided by a judge alone.

Attachment Integration: Any attachments that are explicitly “integrated” into the document are, effectively, part of the contract and should be reviewed as carefully as the rest of the contract.  Always be on the lookout for attachments that are blank or “will be attached later.”

Damage Limitations: Some contracts attempt to put a cap on damages in the event of a lawsuit.  For example, a service provider may limit damages to the cost of the services.

Time Limits: Most types of disputes are subject to a legal “statute of limitations,” meaning there is a time limit on when you can sue.  By contract, however, you can change this time limit (usually by making it shorter).

These and many other “boilerplate” provisions can be found in contracts you may want to create or are asked to review and sign.  And under the right circumstances, these provisions can make an enormous difference in how a contract works or how a dispute is resolved.  The bottom line: don’t sign it until you’ve read and understood it, and get an attorney’s assistance when appropriate.