Currently updated by Karen Lee, Principal, Legal Know-How
Updated by Naomi Messenger, Special Counsel, Swaab Attorneys
Geoff Rees, Director, JRT Partnership (Vic)
Currently updated by Roger Wade, Director, WadeLegal (Qld)
Originally authored by Warren Wackerling, Senior Associate, Holman Webb (Qld)
Currently updated by Stephen Doyle, Principal, Eric Ross-Adjie, Principal, Warren Syminton Ralph (WA)
Originally authored by Lorraine Madden, Senior Associate, Karp Steedman Ross-Adjie (WA)
Bibi Sangha, Senior Lecturer, Flinders University Law School (SA)
Tim Tierney, Partner, Tierney Law (Tas)
Currently authored by Lyn Bennett, Consultant, Minter Ellison (NT)
Originally authored by Emma Farnell, Lawyer, Ward Keller Lawyers (NT)
Greg Brackenreg, Partner and Jim Hartley, Law Graduate, Meyer Vandenberg Lawyers (ACT)
“Boilerplate” clauses are contractual terms that deal with the interpretation and operation of a contract, rather than with its substantive content. The term itself has a varied history. In this regard, the following may be noted:
The term probably derives from the name given in the steel manufacturing industry to rolled plates of steel that were used for the mass production of steam boilers, a standard component of the ubiquitous steam engine.
However, newspaper editors in the early days of mass print also used pre-cast metal plates known as “boilerplates” to send media material that could be used repeatedly in different editions.
More recently, the term has been used in the information technology industry for generic units of writing with a variety of software applications.
The term “boilerplate” therefore implies something that can be rolled out for any or every occasion and that has a multiplicity of practical and standard uses. In contract law, the term is used widely to denote routine, standard or generic terms inserted into contracts, particularly between commercial parties, in order to clarify key terms and outline how the contract is to work and be understood. It typifies the “fine print” in contracts that parties customarily ignore and leave to the lawyers.
However, the image of boilerplate clauses as generic or routine contractual provisions belies the fact that such terms are critical to the effectiveness of a contract. It also conceals the importance of drafting boilerplate clauses deliberately, rather than routinely, with customisation for each contract. This will of course depend on the interests of the commercial party requiring representation and protection. It may also depend on the jurisdiction in which the contract is formed or may be litigated. In many cases, routine insertion of standard boilerplate terms will be appropriate. However, it should be kept in mind that most contractual disputes in the courts are concerned with the proper construction of the contract and its terms. The presence or absence of clear and concise boilerplate provisions, customised for the contract at hand, is therefore often crucial to the outcome of the dispute.
Often, boilerplate clauses simply restate established contract law principles and are not strictly necessary, other than to indicate the parties' intentions. Nevertheless, they are seen as dealing primarily with matters of construction, interpretation, operation, administration and definition. This covers a wide range of possibilities, with no clear agreement about, or authority for, exactly which terms qualify as “boilerplate”. It is perhaps useful to distinguish between
It is important to remember that not all boilerplate clauses are appropriate for all types of agreements. This means the drafter of the contract needs to have a good understanding of the clause’s usage before including it.
Below is a non-exhaustive list of common boilerplate provisions that deal with the interpretation and operation of contracts.
Interpretation
Parties
It is at times useful to specify the parties to a contract by way of a separate clause in order to eradicate doubt or confusion. This could be necessary where there are multiple parties or signatories, where joinder of parties is envisaged or where corporate or firm names need to be specified to comply with regulatory or court requirements.
See Parties.
Recitals
The purpose of recitals is to set out necessary factual background to the agreement. It may be appropriate to include these in a contract. Care should be taken to avoid imbuing the recitals with contractual or promissory intent.
See Recitals.
Time
The interpretation clauses usually state that any reference to time is a time in a certain time zone. Likewise there is usually a reference to what is "Business Hours" and what rule will apply if an obligation to perform occurs on a non-business day.
Persons
Many commercial agreements employ the generic concept of “person” as a means of referring to any natural person or legal entity where the contract as a whole makes such a term convenient.
Reference to a “person” includes corporations, partnerships and unincorporated associations.
See Persons.
Gender, singular and plural
Many contracts make it clear that references to parties are gender neutral and that a reference to one gender includes the other. This avoids possible arguments that certain provisions apply to one party but not another based on gender.
A term is often inserted in commercial contracts to the effect that words denoting the singular include the plural (and vice versa). This is in order to render contracts easier to read without compromising their meaning. Sometimes, these matters are provided for jointly in one clause, although two separate clauses may be used.
See Gender, singular and plural.
Defined terms
Long or complex contractual documents often provide for defined terms in order to avoid ambiguity and promote consistency of usage.
See Defined terms.
References to headings, clauses, schedules etc
Lengthy contracts often use headings to distinguish the content of different terms and clauses. This aids the reader and makes the contract more comprehensible. However, a disclaimer is often inserted to clarify that the heading will not determine interpretation of the content.
A standard boilerplate clause provides that references in the body of the contract to clauses, schedules etc are references to clauses, schedules and other component parts of the contract at hand. Although considered by some as unnecessary, this provides clarity and obviates the need to identify the contract on each occasion.
See References to headings, clauses, schedules etc.
General and particular terms
Many contracts specifically refer to what has been known as the ejusdem generis rule of interpretation. The rule states that where particular words are followed by general words, the general words are limited to the same kind or class as the particular words.
See General and particular terms.
Currency
The currency and its associated permitted symbols are usually stated for consistency in the interpretation clause.
Amendment and replacement of legislation
Where agreements refer to statutes or subordinate legislation, it is not uncommon for a clause to be inserted expressing how the parties intend the agreement to be affected. Where no express term is used, a reference to legislation will be presumed to be a reference to it as repealed or amended.
See Amendment and replacement of legislation.
Counterparts
If a contract is to be signed in counterparts, a clause is often inserted to clarify that each counterpart is deemed an original and that together they constitute one instrument.
See Counterparts.
Operation
Applicable law
An applicable law or “governing law” clause in a contract is designed to determine by which law the contract will be interpreted and governed. In this way the parties may decide that substantive rights and obligations under the contract will be adjudicated according to a chosen body of law, rather than under default private international law principles.
See Applicable law.
Jurisdiction
The parties to a contract may agree to submit to the jurisdiction of the courts of a particular state or country. The submission is usually non-exclusive in order to provide for some flexibility in case the chosen court determines it does not have the requisite jurisdiction.
See Applicable law.
Time of the essence
Time of the essence clauses are sometimes regarded as boilerplate provisions although it is probably more correct to regard them as substantive terms that should be inserted only after careful consideration and appropriate instructions. Drafters of contracts may consider inserting a term that specifically limits, defines or negates the possibility of time being deemed essential.
See Time of the essence.
Dispute resolution
A dispute resolution clause sets out the preferred method, commonly mandatory as a first step, by which any dispute over the contract is to be resolved. It often involves alternative dispute resolution methods such as mediation or arbitration, and commonly requires the cooperation of a third party expert.
See Dispute resolution.
Reasonable endeavours
A contract may require the parties, or one of them, to make certain efforts in order to fulfil the aim of the contract. Where the contract specifies such efforts, distinction may need to be made between endeavours that are “reasonable” and those that are “best”. Much will depend on the exact wording of the clause and on the jurisdiction in which the contract is to be enforced.
See Reasonable endeavours.
Assignment and novation
Many contracts provide that a party shall not assign or otherwise transfer any of its rights, interests or obligations to a third party without the prior written consent of the other party.
See Assignment and novation.
Waiver
It is not uncommon for commercial contracts to contain a non-waiver or exercise of rights clause, the purpose of which is to ensure that a party has not, or is not deemed to have, given up or waived any of its rights, powers or remedies under the contract where it has not exercised such rights or done so only partially. A variant clause will provide no waiver can apply unless it is in writing.
See Waiver.
Severance
Where a provision or term in a contract is held to be unenforceable or invalid in a particular jurisdiction, a severance or severability clause allows the parties to agree that the term will be severed and that it will not invalidate the rest of the contract or affect the enforceability and validity of the term in another jurisdiction.
See Severance.
No merger
A no merger clause is common as a boilerplate provision at the end of an agreement. There will be no merger if the parties intended the contractual term to survive the merging event, hence a no merger clause is usual as a standard. A merger operates to extinguish the lesser of two estates or rights where there is a lesser right which coincides with some greater right and is subservient to that greater right, and title to the two rights or estates is merged.
Notice
A notice clause may be included in certain types of contracts to establish an agreed upon and valid mechanism for the giving and serving of notices and also for determination of whether and when the notices have been validly delivered.
See Notice.
Rights of third parties
Parties to a contract may agree to restrict or exclude completely the rights of third parties that are not a party to the contract itself from enforcing any interests they may expect to receive under the contract.
The extent to which such a boilerplate provision may assist in avoiding the effects of the privity rule will depend on a variety of factors.
See Rights of third parties.
Costs and stamp duty
This clause outlines how the parties apportion costs of drafting and negotiating the contract and which party, if any stamp duty applies, is obliged to pay for stamp duty.
Confidentiality
A confidentiality clause in a contract would normally make it a breach of the contract for either or one party to disclose the terms of the contract or any of its terms, or to enable the unauthorised use or disclosure to third parties of information that the contract has identified as confidential.
See Confidentiality clauses.
Entire agreement
Many commercial contracts are drafted to include "entire agreement clauses", which are considered to be "boilerplate" provisions because they are often routinely used to deal with important aspects of contractual construction. It is true that entire agreement clauses frequently play a significant role when a court is deciding upon the effect of the contract as a whole, but practitioners should be aware of their pitfalls as well as their reputed strengths.
See Entire agreement clauses.