What are Boiler-plate Contracts?

A boilerplate contract is a contractual agreement that is created with the intent to be generally used for various parties, situations and/or industries. In legal terms, you can think of a boilerplate contract as a more general contractual agreement intended to be adapted to suit the needs of an existing situation or relationship, as opposed to a bespoke, individualized agreement. When reviewing a boilerplate contract, it is often advisable for the content of that agreement to be reviewed before being customized for the specific situation it’s intended to address .
Boilerplate language in a contract is considered standardized text that is used to cover a wide range of general situations. Some examples of standard language used in legal boilerplate agreements include:
Because most contracts can be essentially boiled down to the basic terms of "what" "how much" "when" "where" "who" and "why," boilerplate contracts are a highly effective way of simplifying the transaction process between parties when they have a similar need. In fact, due to the repetitious nature of many business transactions, boilerplate contracts are often used in business contexts of all kinds.

Typical Components of Boiler-plate Contracts

It is important to note again that the "boilerplate" in our context has no bearing on the quality of the contract, only on its standardization. With that in mind, the boilerplate of a contract will often contain:

  • Language regarding governing law and jurisdiction.
  • Language regarding waiver of certain provisions or remedies in the event that they are not enforced pursuant to the terms of the contract; this is important because the failure to enforce certain provisions can lead to the interpretation that a party is disregarding their rights and thus estopped from enforcement.
  • Language regarding confidentiality; this is typically a reflection of the parties’ intent to keep the contract itself private. However, confidentiality can also extend to other aspects of the contract that the parties wish to keep quiet.
  • Language informing the parties’ intent to make the contract binding and enforceable; these "enforceability" provisions include merger clauses (that is, the contract itself represents the entire agreement between the parties) and integration clauses (the same as merger clauses), among others.
  • Clauses regarding amendments and waivers of the contract.
  • Clauses regarding assignment of the contract.
  • Clauses regarding the entirety of the agreement between the parties.
  • Language regarding the relationship between the parties; language may indicate that one or more parties is an employee or agent of another party, or of each other, or that they are independent contractors.
  • Language regarding indemnification; this is language that will often make a party responsible for maintaining the other (or others) free from any (or all) losses related to breaches or violations of applicable law, the contract, or other events.
  • Language regarding dispute resolution and governing law; such provisions will typically dictate which laws govern the contract, and under what jurisdictions the contract will be litigated.

The Benefits of Boiler-plate Contracts

These contracts are beneficial to companies in a variety of ways. Consistency in terms and phrases is an advantage, as the same contract can be used in multiple scenarios.
Because these types of legal documents are templated, they save time. The time spent to tailor-make a contract is, therefore, vastly reduced. As far as efficiency goes, they are much easier for a business to implement to cover a wide range of services or products.
Cost-effectiveness is another major factor in favor of boilerplates. It costs a company less to use these pre-written, fill-in-the-blank contracts in lieu of ordering individualized contracts.
Just like using a template for a document or presentation saves time and effort, using a contract boilerplate does the same thing. Instead of reinventing the wheel and writing out each contract from scratch, or employing lawyers to do so, a company can have its legal advisors draft a single contract with consistent language that can be reused time and again with different clients.

Cons of Boiler-plate Contracts

When an attorney, a business person or a non-lawyer without a blindfold copies and pastes language from one deal to another or from the internet to a contract form, the result is a boilerplate contract. Lawyers, parties, and businesses do this every day in the rush to complete a deal without necessarily knowing that what they are doing is generating boilerplate.
Boilerplate, as useful as it can sometimes be, has its drawbacks and may not necessarily be suitable for every situation. Here are a few possibilities where it may be a problem: Lack of Customization: Even if the boilerplate language you are using has been used successfully in the past, it may not account for the specific needs of the current deal. In essence, with boilerplate contracts you get what you pay for: sometimes it works and sometimes it doesn’t. It’s completely unprofessional to re-use language and is certainly not a good idea from a legal point of view, as there are endless possibilities for liability (which is what I frequently remind clients about). No two deals are exactly alike. Every party to a contract should think long and hard whether to include a provision that has not been modified from the last contract. An example could be requiring the tenant to give notice before an insurance policy is canceled. While it’s a good provision, it might need to be changed in order to be most relevant.
Inconsistent Terminology: When different agreements use different terms to refer to the same thing the reader is going to be confused. For instance, if you see "the Company" in one place and "the Corporation" in another place to refer to the same entity, the reader is going to have to pause to figure out which is which. If these documents go to the court, it is going to be difficult for the judge, jury, and clerks also to remember which means what. You are doing yourself and the people reviewing the contract a disservice by using different words.
Boilerplate in the Wrong Deal: Maybe you are off the mark with regard to what is relevant for the deal you are using the boilerplate contract for. Let’s say you are looking at a boilerplate lease that has provisions for liability and insurance and you are not even requiring the lease to have insurance. Or perhaps you are reviewing a partnership agreement but the boilerplate version you were using discussed an incorporation and was entirely unrelated to the type of partnership you are contemplating. These problems are not uncommon, and they are not always obvious when you review the document. You have to make sure that the boilerplate you are using is appropriate for the contract you are preparing.

Legal Issues and Contracts that Include Boiler-plates

Entrusting boilerplate contracts to AI or non-lawyers comes with the risk that a legal professional would identify loopholes, flaws and hidden consequences. Consider, for example, the classic ambiguity of "best efforts" as a standard for meeting targets. What constitutes a "best effort" for someone may not be a "best effort" for someone else, leaving you exposed to protracted litigation over what the term means — if the other side is willing to stretch a definition in order to win.
Boilerplate contracts can also expose you to excessive liability that you might otherwise not accept. For instance , a standard warranty disclaimer is usually meant to warranty only what you are providing. Combining that with a limitation of liability clause that attempts to limit your liability for all potential exposure — including indirect or consequential damages — can be very dangerous in some situations.
A court might view such a contract as too broad in scope, requiring the company seeking to enforce the contract’s limited liability to escape liability for all types of damages.
An enforceable contract must always comply with local laws. Enforceability can therefore be a casualty in boilerplate contracts, which often use US law even if one or both sides are located across the globe. A contract originally written in US legalese may not be enforceable as-is in Canada, for example, where there are protections for whether a party can waive liability for certain types of risks.

Modifying Boiler-plates

Although the goal may be to use a form agreement, this strategy is often unrealistic. There are many reasons for this essentially universal phenomenon, not least of which is the policy goal of customizing your agreement to your specific circumstances. To accomplish this, you need to know how to read, understand and modify professionally drafted contracts, which this series is intended to teach.
Careful review of the text of a boilerplate contract will reveal that there are many provisions that simply do not apply to your situation. Conversely, there may be provisions that need to be added in order to tailor the contract to the situation being covered by the document.
Boilerplate will typically provide a good starting point for your new contract. The form will often be available at low cost to your business and provide a good, objective overview of how other companies have handled the same situation. Many times the contract will have been carefully vetted by corporate counsel.
Here are a few suggestions for making the necessary modifications of a boilerplate contract:

  • Change all references in a contract to your company’s name from the form’s references to the name of the company from which the form was taken. Be consistent. Don’t mix and match names.
  • Make sure all required licenses, permits and identification numbers are filled in, and that appropriate legal references and clauses are added if they are missing from the form.
  • Review the contract carefully to see if there are sections that do not apply to your transaction. Why would you want to highlight some irrelevant section throughout the agreement when it will be easy to delete it, especially if that section uses your industry’s jargon?
  • Remove all clauses that you are sure that you will never use, and move any terms that should be immediately prior to the signature clauses (such as state jurisdiction).
  • Change the name of any generic parties (if any) from the form contract to the name of the parties in your transaction, being especially careful of spelling and punctuation. Again, consistency is important. Some courts may want the names to be capitalized, in some cases.

However, some boilerplates are so poorly drawn that modifications may not be possible. Read the contract very carefully to determine whether or not there are any clauses that need to be replaced wholly or rewritten with all new language.

The use of Boiler-plate Contracts in the Real World

Boilerplate contracts and clauses appear in nearly all aspects of both corporate and consumer transactions. For example, a common use of boilerplate provisions is in employment agreements, particularly for employment or consulting positions. The parties to an employment agreement may include the following boilerplate language in order to agree on which state or federal laws will apply to the contract, jurisdiction for any disputes, and whether arbitration will be used to resolve such conflicts:
This Agreement shall be governed by, and construed in accordance with, the internal laws of California, without giving effect to any choice of law principles.
You agree that any action at law or in equity arising out of or relating to this Agreement may be filed, and only filed, in either the state courts or the federal courts located in the County of Los Angeles, California, and you hereby consent and submit to the personal jurisdiction of such courts for the purposes of litigating any such action.
The parties agree to submit any dispute between them regarding this Agreement to final and binding arbitration before JAMS, Inc. ("JAMS") , in accordance with its then current Employment Arbitration Rules and Procedures (the "JAMS Rules"). Any award rendered through arbitration may be entered in any court of competent jurisdiction.
Another common use of boilerplate clauses is in a lease agreement. A tenant leasing a commercial facility may wish to ensure the right to terminate the lease if the landlord fails to provide essential services such as electricity or air conditioning:
Landlord may, upon three (3) days’ notice to Tenant, terminate this Lease whenever electricity, water, or other services required to be furnished by Landlord shall not be fully available or operable for the legally permitted period of time, and the provisions of this Lease shall terminate as of the date of such notice.
Boilerplate language also appears in sales contracts. For instance, if a seller of goods wishes to limit its liability upon a breach of the agreement, the seller may incorporate a clause that effectively caps damages in the event of a breach:
Seller’s liability for breach of this Agreement shall be limited to the purchase price of the goods purchased under the Agreement.
The above examples are just a few of the potentially countless real world, practical applications of boilerplate contracts. In general, agreements involving the purchase of goods or services, real estate transactions, employment contracts, and shareholder agreements may benefit from it boilerplate provisions.