Demystifying small print: Boilerplate clauses explained

Do you breeze through contracts with a mere glance before signing on the dotted line? If so, you are not alone. Most individuals who are required to sign contracts tend to focus on what seems “important” whilst glossing over the finer details. Ignoring the fine print could spell trouble for you or your business. It is time we unravel the mystery behind boilerplate clauses and why they matter more than you think!

What are boilerplate clauses?

Normally found at the beginning or end of an agreement, boilerplate clauses are standard terms that regulate how a contract will operate, including its duration, validity, enforceability and interpretation. Excluding indemnity provisions, which also fall under the boilerplate umbrella, boilerplate clauses are often not heavily negotiated. However, there can be detrimental consequences if overlooked.

Why can boilerplate clauses be confusing?

Despite their standardised appearance, boilerplate clauses often leave room for interpretation. Legal jargon adds to the confusion, making it tough to grasp the true meaning behind these clauses.

Boilerplate clauses are not one-size-fits-all. Depending on the document or the drafter’s preferences, they can vary in application. This variability can throw even the savviest readers off track.

Legal terms can feel like a foreign language to those without legal training. Without a guide, navigating through dense contracts can be like searching for a needle in a haystack.

Examples of boilerplate clauses

It is not unusual for boilerplate clauses to be the cause of litigation. Two clauses that present frequent confusion are notice provisions and the no variation clause.

Notice

Many contracts include terms that require one party to serve notice on the other or a third party in specified situations (for example, providing notice to terminate the contract). A “Notices” clause will usually cover how to serve notice under the contract and when notice is deemed delivered. Although seemingly inconsequential, case law has shown that there are hidden consequences to ignoring this clause.

A recent case involving the bank NatWest highlights issues that can arise from not giving proper attention to the notice clause. NatWest attempted to extend a contract with Mr John Leach, a business owner of luxury hotel chain Greenclose.

The contract stipulated that NatWest could extend the agreement by giving notice to Greenhouse in any matter set forth but may not be given by fax or electronic messaging system. NatWest purported to give notice of the extension by e-mail. As this was not a permitted method of serving notice under the contract, the High Court determined that the notice sent by e-mail was ineffective, meaning the contract was not extended. 

The oversight of the notice provision proved to be detrimental for NatWest. As NatWest had failed to serve a valid notice, NatWest was liable to repay Mr Leach all the sums he had paid since the date the contract ended with interest.

Had it been carefully considered in the fine print, what might have seemed like a minor detail could have altered the course of events and avoided a costly litigation.

No Variation

In the intricate world of contracts, a variation clause (sometimes called an amendments clause or no variation clause) sets out the procedure for parties to follow to change a contract after it has been signed. A variation clause sets out agreed procedures on how to vary a contract, typically in writing and signed by both parties.

This helps with efficient contract management and certainty that both parties agree and understand any variation to a contract. Without a variation clause, changes to the contract can be made informally, such as over the telephone, leading to confusion as to what was agreed and difficulty proving what each party’s continuing obligations may be under the contract.

A variation clause that sets out a procedure that any variation must be in writing would, you might imagine, provide certainty and a clear rule for the parties to follow. However, in 2016, the Court of Appeal determined a case which has potentially caused more confusion. The Court of Appeal found that despite a contract stipulating that variations would only be valid if they were in writing and signed by the parties, the court ruled that oral or conduct-based changes could indeed override this clause.

While a variation clause aims to promote certainty and deter false claims of oral agreements, the ability to vary contracts orally raises questions about true commercial certainty for parties. Balancing legal rigidity with practical flexibility remains a challenge in navigating contract dynamics.

Something to remember

Boilerplate clauses are not miscellaneous provisions. This is a dangerous view to adopt as they perform a valuable purpose in contracts by clarifying the relationship between parties and providing certainty in the event of a dispute.

How can we help you?

Much like a contract, we hope you have not glossed over the importance of the finer details in this article. If you have any queries relating to boilerplate clauses and contracts, please do not hesitate to contact Tim Field at [email protected] or on 0330 818 3166.