Episode 7: Top 5 Boilerplate Provisions

In the business world, reading through an entire contract can often seem like a tedious practice, especially because many of the contracts you sign have similar provisions. Reading through the new terms is wise, but why bother with the standard stuff? In today’s podcast, Alexander and Peter explain the crucial role that these standard contract provisions, or “boilerplate provisions,” play in creating a legal agreement between two parties.

Alexander and Peter each rank their top 5 boilerplate provisions, covering the non-waiver clause, indemnification, limitation of liability, and more. They discuss how an absence of any of these provisions, or even a non-specific version of them, can lead to thousands if not hundreds of thousands of dollars in litigation fees for both parties.

As promised in the podcast, here are examples of each of the provisions discussed:

Notice Provisions:

  • Method of Notice. The parties shall give all notices and communications between the parties in writing by (i) personal delivery, (ii) a nationally-recognized, next-day courier service, (iii) first-class registered or certified mail, postage prepaid[, (iv) fax][ or (v) electronic mail] to the party’s address specified in this agreement, or to the address that a party has notified to be that party’s address for the purposes of this section.
  • Receipt of Notice. A notice given under this agreementwill be effective on
    • the other party’s receipt of it, or
    • if mailed, on the earlier of the other party’s receipt of itand the [fifth] Business Day after mailing it.

Source: https://www.contractstandards.com/clauses/notices

Venue (Jurisdiction and Venue) Clause:

  • Governing Law. This agreement shall be governed, construed, and enforced in accordance with the laws of the State of [GOVERNING LAW STATE], without regard to its conflict of laws rules.

Source: https://www.contractstandards.com/clauses/governing-law

Non-Waiver Clause:

  • Affirmative Waivers. Neither party’s failure or neglect to enforce any of rights under this agreement will be deemed to be a waiver of that party’s rights.
  • Written Waivers. A waiver or extension is only effective if it is in writing and signed by the party granting it.
  • No General Waivers. A party’s failure or neglect to enforce any of its rights under this agreement will not be deemed to be a waiver of that or any other of its rights.
  • No Course of Dealing. No single or partial exercise of any right or remedy will preclude any other or further exercise of any right or remedy.

Source: https://www.contractstandards.com/clauses/waiver

Indemnification Clause:

  • Indemnification by [PARTY B]. [PARTY B] (as an indemnifying party) shall indemnify [PARTY A] (as an indemnified party) against all losses and expenses arising out of any proceeding
    • brought by either a third party or [PARTY A], and
    • arising out of [PARTY B]’s breach of its obligations, representations, warranties, or covenants under this agreement.
  • Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
    • brought by either a third party or an indemnified party, and
    • arising out of the indemnifying party’s willful misconduct or gross negligence.
  • Notice and Failure to Notify
    • Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
      1. notify the indemnifying party of the indemnifiable proceeding, and
      2. deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
    • Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party’s failure.
  • Exclusive Remedy. The parties’ right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].

Source: https://www.contractstandards.com/clauses/indemnity

Limitation on Liability:

  • Mutual Limitation on Liability. Neither party will be liable for breach-of-contract damages that are remote or speculative, or that the breaching party could not reasonably have foreseen on entry into this agreement.

Source: https://www.contractstandards.com/clauses/limitations-on-liability

Entire Agreement Clause:

  • Entire Agreement. The parties intend that this agreement, together with all attachments, schedules, exhibits, and other documents that both are referenced in this agreement and refer to this agreement,
    • represent the final expression of the parties’ intent and agreement between the parties relating to the subject matter of this agreement,
    • contain all the terms the parties agreed to relating to the subject matter, and
    • replace all the parties’ previous discussions, understandings, and agreements relating to the subject matter.

Source: https://www.contractstandards.com/clauses/entire-agreement

Consideration Clause:

  • In consideration of the commitments and obligations made by [PARTY NAME], [COMPANY NAME] agrees to pay to [PARTY NAME] a payment in the amount of [CASH CONSIDERATION AMOUNT], payable in [NUMBER OF INSTALLMENT PAYMENTS] equal [PERIOD OF INSTALLMENT PAYMENTS] installments].

Attorney Fees Clause:

  • Attorney Fees. If either party brings an Action to enforce their rights under this agreement, the prevailing party may recover its expenses (including reasonable attorneys’ fees) incurred in connection with the Action and any appeal from the losing party.

Source: https://www.contractstandards.com/clauses/attorney-fees

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