Don’t be fooled by the innocent looking boilerplate provisions at the end of your contract – they are more important than you might think.

Nearly every contract concludes with a set of standard boilerplate provisions (sometimes called the miscellaneous section). These provisions deal with the interpretation of the contract’s terms and enforcement of the contract. And the slightest little change to any one of them could result in contract-wide effects that might place too much risk on your startup or small business.

In this post we’ll look at seven common boilerplate provisions that are used to help the parties interpret the contract and in our next post we’ll look at five common legal provisions that impact your rights if a dispute arises out of the contract (read that here).

Entire Agreement

When negotiating a contract, you’ll likely have a lot of side documents, email communications, redline agreements, and similar documents that lead up to the final draft. This provision says that none of those documents are to be used to change the meaning of the final draft.

Amendment

It is usually best to state that the contract cannot be amended without the written consent of all parties. This one’s pretty simple, however sometimes it will only require the written consent of the main stakeholders to the contract.

Waiver

Sometimes a party will choose not to enforce their rights under a contract (for example, they may choose to continue a contract rather than terminating it when payment is just a few days late). However, to prevent that waiver from modifying the terms of the contract (and thus permitting the paying party to pay late again in the future without consequence), most contracts will contain various provisions stating that one waiver shall not be effective unless it is in writing and shall not be used to permit future breaches of the same type.

Severability

If a judge rules that a certain provision of your agreement (an overly broad non-compete for example) is not enforceable, you probably don’t want the judge to throw out the entire agreement. That’s why you include a statement that all provisions are separate from the others and that if one is thrown out, the others shall remain enforceable. Additionally, you might include a provision instructing the judge to modify the provision to make it enforceable (for example, narrowing the scope of a non-compete).

Assignment

In most situations, you don’t want the other party to a contract to have a right to assign the agreement to someone else (for example, if you hire Bob to cook burgers at your wedding, you don’t want him to be able to assign his obligations to cater to his son Gene). However, sometimes you’ll see an exception that says one party can assign their rights whenever they want, or sometimes only if there is a merger or other change of control.

Notices

If formal notices are contemplated in the agreement (such as early termination notices), then you might include a provision outlining how notices must be delivered (for example, in-person, overnight courier, email, etc.), where they must be delivered (the exact address that must be used), and when delivery is effective (for example, one day after being properly sent via overnight courier).

Counterparts, Digital Signatures, & Copies

Many contracting parties don’t meet in person to sign contracts. Rather, they each sign a separate copy of the contract (a “counterpart”). This provision says that, collectively, all signature pages are to be placed together to form one contract. Additionally, while not technically required, we like to include a statement that digital signatures are permitted and that a party may rely on a photo copy of the agreement.

What’s Next

In our next post we’ll explore boilerplate provisions related to legal rights in contracts (read that here).

However, if you have any questions about the boilerplate provisions in your contract, you should contact us to learn whether they are right for you in your situation.

 Subscribe to Venture Update

Practical legal tips, news, and more. Delivered monthly to your inbox.

Subscribe Now


Image: Adobe/roman_pelesh
*This article is very general in nature and does not constitute legal advice.