Boilerplate Clauses: 3 Things To Check For In A Contract

All contracts usually contain some standard form clauses. These are known as boilerplate clauses. It is a good idea to become familiar with these clauses, given their commonality.

Types of Boilerplate Clauses

1. Governing Law

An example of a Governing Law clause would be a clause to the effect that “the laws of NSW will govern the parties.” The governing laws should be those of the relevant state, territory or federal jurisdiction in which the contract will be performed or alternatively, the location to which the parties have a substantial connection.

Following from this is the concept of exclusive jurisdiction and non-exclusive jurisdiction. The parties may elect to be bound to one particular location and court. This prospect is known as exclusive jurisdiction. Alternatively, non-exclusive jurisdiction allows the parties, if necessary to sue in other courts and jurisdictions.

2. Dispute Resolution and Notice

A contract may stipulate that multiple notice and mediation requirements must be satisfied before the parties may elect to proceed to litigation. To this extent contract may also provides for a specific mediator in the event of a dispute.

Notices usually do not seem important. However, when there is a dispute they can become a hill to die on. In other words, failure to comply with a notice may allow another party to terminate the contract. Standard notice clauses may state that parties must be notified in writing of changes to, or possible delays in complying with terms of the contract. This might mean keeping a client up to date and having a consistent paper record. In the building and construction industry changes are often material subject to strict regulation and thus contract variations and amendments require written acceptance.

3. Subcontracting

Capabilities such as the skill, judgment and expertise of one party is often the catalyst for contracting parties. Subcontracting may dilute these competencies. Where contracts remain silent as to subcontracting the issue lends itself to interpretation.  Where the parties are individuals and the competencies are central to the individual, subcontracting is likely not implied. Where the contract is not ‘personal’ in its obligation then there may be provisions for subcontracting where competencies are transferrable.