How Boilerplate Contracts Can Save You Time and Money

Content

• What is a boilerplate contract?
• Why do you need boilerplate contracts?
• What are typical boilerplate provisions?
• How do you best utilize boilerplate contracts?
• Conclusion

Contracts are not all created equal. They fulfill the needs of parties per their industry and jurisdiction specifications. However, creating these legal agreements from scratch each time might delay onboarding customers, vendors, employees, or partners. Legal professionals will be drafting contracts day in and day out.

It can end up costing a lot of time and money for businesses with expanding portfolios. Fortunately, parties can reuse certain clauses, language, and provisions again, even for contractual agreements with different goals. This is what boilerplate contracts are all about. Here’s all you need to know about using them for fast-tracking business operations.

What is a boilerplate contract?

A boilerplate contract is a standard form of a contractual agreement containing pre-written clauses and terms reusable in various agreements. These contracts provide legal protection to all parties in a wide range of situations. It ensures there are essential terms and conditions to dictate the commercial relationship.

These stand-form provisions and language can accelerate the process of drafting legal agreements for all kinds of purposes. They can modify and customize them without jeopardizing their competency or legal validity. Businesses usually employ boilerplate contracts for NDAs, employment agreements, service agreements, and real estate contracts.

Why do you need boilerplate contracts?

Boilerplate contracts contain text or provisions that companies can use for various purposes with minimal or no modification. It enables them to standardize legal agreements’ structure, content, and language across the board. When companies need to scale contracts for high-volume, low-risk uses, it is extremely beneficial.  

It reduces the errors and inadequacies in the document. They can pass through reviews, approval, and execution with little trouble. Consequently, sales, procurement, finance, and other departments can self-serve enforceable contracts in no time. That is why how and why businesses utilize boilerplate provisions and language can have a lasting impact on contractual relationships. 

Streamlining the contract process

Drafting contractual agreements can be a long and tiresome process. Any hurdles can delay the sales and procurement lifecycles, affecting the bottom line. Businesses can overcome these shortcomings by tailoring boilerplate contracts to meet unique requirements. They need little time and effort to generate a large number of contractual agreements. 

Reducing legal risks

Any type of contract must adhere to organizational, legal, and industry standards. Any inefficiency in the content can lead to long-lasting consequences for the involved parties. Businesses can utilize boilerplate provisions to guarantee all contractual agreements contain all elements, language, and structure necessary for their enforceability.  

Ensuring consistency across documents

Consistency is essential for drafting and enforcing contracts. It helps to prevent ambiguity, disputes, and inefficacies in commercial relationships. Boilerplate contracts allow legal professionals to instill uniformity in legal agreements across the organization. The terminology, language, and structure of the document must all conform to their standards and specifications. 

What are typical boilerplate provisions?

Cookies you agree to when visiting websites or the terms and conditions you read when purchasing software all contain boilerplate provisions. Businesses can use existing contracts to establish terms when they lack the time and resources to create new ones each time. All they have to do is alter them to suit their unique purposes. The following are typical boilerplate provisions that businesses use to ensure legal protection and consistency.

Governing law: The governing law clause specifies which jurisdiction's laws will apply in interpreting the contract. This clause is essential for settling conflicts because it clarifies the parties' legal responsibilities and the possible legal landscape in which they may find themselves.

Force majeure clause: These boilerplate clauses release parties from their contractual duties if unforeseen events render them illegal or impossible to fulfill. They protect businesses from legal consequences and liabilities for events beyond their control. Force majeure clauses safeguard parties against natural disasters, pandemics, conflicts, etc.

Dispute Resolution: These clauses describe the method of resolving disputes, such as mediation, arbitration, or litigation. Clearly defining the resolution method in a written agreement can help prevent costly and long-lasting litigation. It specifies mechanisms, jurisdiction, and prevention strategies.

Entire agreement: It states that the written contract represents the entire understanding between the parties, superseding any prior negotiations or agreements. It helps prevent disputes and misunderstandings in commercial relationships. These provisions primarily restrict the scope to the specific terms stated in the contract.

Confidentiality: Ensures that sensitive information shared between the parties remains confidential. They enable businesses to protect trade secrets, proprietary data, and strategies. These clauses are typical in mergers, settlements, and employment contracts. 

How do you best utilize boilerplate contracts?

While boilerplate contracts may seem generic, they can have significant implications depending on the context of the contract. Effectively handling these provisions and clauses is essential to derive maximum value from contractual relationships. It starts with understanding their purpose, carefully reviewing each provision, and adapting them to suit the specific needs of the agreement. 

1. Understand the purpose

Boilerplate clauses address common legal issues that could arise during the contract. While each clause may seem routine, their language and structure can vary, and they may need to be adjusted based on the specifics of the agreement or the parties involved. These clauses help ensure consistency and clarity in the event of a dispute or when enforcing the contract.

2. Review and tailor agreements

While these clauses are standard, they should be carefully reviewed to ensure they reflect the specific circumstances of the parties involved and the nature of the agreement. For example, the governing law should be tailored based on where the parties are located and where they expect any legal disputes to occur. Dispute Resolution clauses might need to specify whether disputes should go to arbitration or court and the specific process for resolution.

3. Ensure clarity and precision

The language in boilerplate clauses should be clear and precise to avoid ambiguity, which could lead to costly litigation or confusion. While the clauses are standardized, wording should be carefully crafted to avoid unintended legal consequences. For example, the term "reasonable notice" in a termination clause should be more specific, as "reasonable" can be interpreted differently in different legal contexts.

4. Balance risk

Some boilerplate clauses, like indemnity or liability clauses, can significantly impact the risk allocation between the parties. It's important to evaluate whether these clauses unfairly burden one party. For instance, an indemnity clause that requires one party to bear all costs for certain types of losses might need to be adjusted, particularly in cases where risks are not equally shared.

5. Negotiate and customize

If you are the party drafting the contract, you may have more flexibility to tailor the boilerplate clauses to your specific needs. Conversely, if you're reviewing or signing a contract, you should not hesitate to request modifications to clauses that may be overly restrictive, unfair, or unclear. Legal standards and interpretations of boilerplate clauses can evolve, influenced by case law and regulatory changes. It’s important to stay updated on changes in the law that could affect the validity or enforceability of certain clauses, particularly in specialized contracts like international agreements, joint ventures, or long-term service contracts.

Conclusion

Boilerplate clauses, though standard, are crucial in shaping the legal framework of a contract and protecting the interests of all parties involved. By carefully reviewing, customizing, and balancing the language of these clauses, you ensure that the contract is both comprehensive and fair. While they may seem routine, ignoring the nuances of boilerplate clauses could lead to unintended consequences or legal disputes. Dock 365 offers a thoughtful and informed approach to these provisions to streamline contract management. From pre-approved templates to automated workflows, the centralized platform simplified every phase of the contract lifecycle.