8 Common Boilerplate Clauses and Why They Matter

Boilerplate clauses are, by definition, routine provisions that appear in nearly all business contracts and are often overlooked. This does not mean they do not carry significant weight or have any impact on your business agreement; the purpose of boilerplate clauses is to protect the interests of all parties that sign the contract. Although boilerplate provisions vary from contract to contract (another reason to pay attention to them), there are a handful of common ones. 

  1. Indemnification Clause. Sometimes referred to as a “hold harmless” clause, this clause aims to specify which party is responsible for litigation brought by a third party. This is often meant as insurance for parties that hire contractors or other parties they might regularly do business with. 
  2. Escrow Clause. Occasionally, compensation for a specific job is best held in a special account while the work is being completed. The escrow clause may also specify in which circumstances the escrow account may be touched, and by whom. 
  3. Notice Clause. The notice clause specifies the manner in which notices are disseminated and delivered to the two parties. The notice clause touches on many other clauses, because to amend the contract, for example, you must properly notify the other party. 
  4. Confidentiality Clause. This particular provision states that certain business operations performed under the contract are not to be discussed with outside parties. A common name for this is a non-disclosure agreement, which is common in other types of contracts besides business.
  5. Arbitration Clause. As arbitration is the most commonly used alternative dispute resolution, there is a good chance your business contract will address this possibility. The provision could state that any dispute will be settled by arbitration, for example, or it could determine whether or not the decision or an outside arbitrator would be binding.
  6. Force Majeure Clause. Translating into “superior force” from French, this exempts parties from adhering to the contract when an unforeseen event radically changes things. Such an event is sometimes referred to as an “Act of God” and includes many types of natural disasters.
  7. Amendments Clause. This lays out the process and requirements for valid alteration of the original agreement. 
  8. Assignment Clause. This clause simply affirms that all (or specified) terms apply only to the two parties that signed the contract. This is to affirm, among other things, that neither party contracts or subcontracts out any part of the operation.

 

 

 

 

 

 

 

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The devil is in the details, and there are a lot of details in boilerplate clauses. Don’t run the risk of being stuck in a contract that doesn’t work for you. Have us take a look over it before you sign. Call us today at (305) 431-5678.

Trembly Law

In the South Florida legal community, Brett sits on the Board of the South Miami Kendall Bar Association, the Florida Bar 11th Circuit Grievance Committee, volunteers on the Florida Bar Young Lawyers Division Mentoring Program, the Dade-County Bar Associations Rainmakers Committee, and annually volunteers for Miami-Dade County’s Ethical Governance Day.
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