What Is a Boilerplate Agreement?
A boilerplate agreement is a legally binding written document that contains standard or generic parts, sections, phrases, and/or provisions that have been used many times before in other contracts. Sometimes called a "template" contract, an experienced attorney helps companies draft and/or revise boilerplate contract templates that are valid and enforceable in that state, and that can be used multiple times with different parties, for different goods, products, or services, with different specifications and terms and conditions to hopefully form valid and enforceable future contracts with multiple companies without the need for a business attorney to draft a new contract each time. The contract may be one long generic document or a short document with numerous boilerplate attachments. For example, a boilerplate service agreement with rapid copying and printing company may be a relatively short agreement with many boilerplate "schedules" or "attachments" that clearly list the specific services that the copy shop will provide to XYZ Corporation as well as the rates , fees, and charges for the specific copies, scans, prints, etc. that will be provided to XYZ Corporation, and/or a separate schedule of prices for various binding and paper options available to XYZ Corporation, for example.
A boilerplate contract template requires modifications every time to reflect the unique ideas of the people involved. However, a good quality boilerplate contract template can save a company time and money by allowing an attorney to quickly and efficiently modify the contract template only as needed, rather than drafting a new contract from scratch. In addition, because the boilerplate contract template has been written and used many times before, an experienced attorney will usually be able to identify potential contract problems and issues earlier in the process, and there may not be as much legal liability to the company for failing to raise any concerns because the attorney did not write the boilerplate contract template and/or there was no real opportunity to revise the language in a unique way.
What Does a Boilerplate Agreement Template Usually Contain?
One of the most common clauses found in every boilerplate agreement is the State ("or Commonwealth") law that governs the agreement. Although it may seem like a mundane administrative issue, the significance of this clause cannot be understated. The clause is intended to ensure that the contract is interpreted in one particular State or Commonwealth, using State or Commonwealth law, regardless of where the parties reside or conduct business. This section could be "Article I" or "Section 1," and may also be known as a "Choice of Law Provision" or "Governing Law Provision." To illustrate the importance of this clause, let’s assume a sample agreement has a New York Governing Law Provision, and the parties are located in Georgia. Under Georgia law, the section which may appear as a "Limitation of Liability" may only allow a party to limit liability to the party’s insurance proceeds. Under New York law, however, such a provision may be enforceable, assuming the limitation is not proven to be unconscionable. Thus, even though the clauses are identical, the respective laws vary between the States, and the governing law clause is critical to determining which State and Commonwealth’s laws apply.
Another prevalent provision is one making the agreement the "entire understanding" of the parties, with prior agreements superseded by the new agreement. An example of such a provision is as follows: This Agreement supersedes all prior agreements and understandings between the parties hereto with respect to the subject matter hereof and constitutes the sole and entire agreement between the parties with respect to the subject matter hereof.
Arbitration clauses, forum selection clauses, and integration clauses are other ones frequently encountered. Arbitration clauses provide for arbitration as a form of dispute resolution, rather than litigation, and generally include little detail about where, when, and what the arbitration rules are, which can often lead to issues later. Forum selection clauses establish the location(s) where the parties agree to conduct any potential litigation. For instance, if the parties to an agreement are in different Commonwealths or States, one may be at a disadvantage if a case is brought in the other party’s home State or Commonwealth, and the forum selection clause (and governing law provision, as described above) becomes critical. Integration clauses are similar to the one described above, but may build on the prior agreements, including only relevant portions of the prior agreements. A sample integration clause is below: This Agreement supersedes and is intended to be the complete and final expression of the understanding of the parties with respect to the subject matter hereof.
Other "basics" found in boilerplate agreements include the representations, covenants, and warranties that the parties make to one another (frequently before the closing date of a transaction). Representation clauses typically contain the assurances and "promises" being made by the parties to the other. Covenant clauses include promises to perform certain actions, and states that the parties undertake to do so, while warranty clauses include the terms that each party agrees to, typically in the area of protecting the counterparty (i.e., if one party hides something from the other regarding liability exposure or costs, the other party is entitled to sue for violation of the warranty). An example is as follows: Each party makes the following representations, warranties, undertakings, agreements, and acknowledgements: (a) All representations and warranties of each party in this Agreement, in any annex, schedule, or certificate delivered pursuant to this Agreement, and any certificate delivered at any time pursuant to this Agreement are true and correct in all respects accurate.
Other "catch-all" provisions of boilerplate agreements include provisions on confidentiality, and terms on assignments, force majeure, indemnification, third-party beneficiaries, severability, notices, and amendment/modifications.
The Perks of Using Boilerplate Agreement Templates
Boilerplate agreement templates are popular tools in the business world that take advantage of tried-and-true language to create a contract that is designed to be easily customized to suit a variety of needs. When used properly, these templates provide a distinct advantage over creating agreements from scratch, as they can save valuable time, offer consistency, and provide risk management benefits to businesses. In many ways, working from boilerplate templates is just like having a list of tools already pre-packed in a toolbox—your legal team has everything it needs on hand to craft the necessary documents. Time savings are perhaps the most substantial benefits, allowing businesses to craft a contract in a fraction of the time it would take if it were created from scratch. This is invaluable for time-strapped professionals and sales teams eager to finalize deals. Beyond simply saving time, using boilerplate agreement templates also provides consistency in the written word. It ensures that specific, critical information is always included when an agreement is generated. This is especially important for business leaders of companies that perform similar work for multiple clients. If this is your situation, creating a template agreement for each type of project you perform is a great way to ensure that all of the appropriate details are always accounted for. Consistency in contract language plays a similarly beneficial role when it comes to protecting your business. Depending on various circumstances, boilerplate language can help limit your liability exposure related to anything from confidentiality disclosure to palpable breach.
How to Edit a Boilerplate Agreement Template
The obvious strength of an agreement template is its ease of use – fill in the blanks, print, and you’re done. But unless you’ve reviewed the document carefully, it’s unlikely that it’s suitable for your specific transaction. Thus, it may be a good idea to customize a boilerplate agreement template.
Unfortunately, a common problem with customizing agreement templates is that drafters make changes that are either unnecessary or detrimental to their overall purpose. For example, many drafters remove "boilerplate" text because they feel that it makes their agreement seem too much like all the others. This is most often the case with legalese-laden provisions, which are changed for that very reason. But these provisions are often the most effective in protecting a party’s interests – and sometimes the only provisions in an agreement that will do so. If removed, a party may be left without any legal recourse against another party that may be taking unfair advantage of it.
Another common mistake is to leave out or otherwise modify definitions. As explained in Choosing Definitions, definitions are a valuable tool for categorizing certain terms and phrases, especially when their meanings vary for different purposes. Even the worst contract templates normally define terms like "Agreement", "party", and "Confidential Information", among others. These provisions should not be changed, as they are likely the intention of the drafter, but if they are, the drafter should include replacements.
An even worse mistake is to add in superfluous content. While there’s no harm in adding boilerplate provisions that establish legal requirements, obligations, and rights that already exist, unnecessary content can create confusion as to an agreement’s meaning.
A primer on how to customize an agreement template can go a long way to creating helpful provisions, especially when drafting from a template. But more often than not, it’s best to incorporate additional content into an existing agreement template to the extent necessary to cater to your specific needs and requirements, rather than change anything that might remove some of the value of an existing provision.
Limitations and Legal Considerations
While boilerplate agreement templates can be a useful resource for business owners, they also come with potential legal pitfalls. One significant issue is enforceability. Courts may not uphold agreements that were written in a jurisdiction other than where the lawsuit was filed, as it may be viewed as favoring one party over another. Similarly, the legal language used in boilerplate agreement templates may not be legally binding in all jurisdictions. For example, those that violate state or local laws, particularly around consumer protection and privacy issues.
Another important legal consideration is the jurisdictional issues that may arise when using boilerplate agreement templates. Depending on where your business is located and where the agreement will be legally enforced, there may be specific rules and regulations that must be adhered to. For instance, some states have unique requirements when it comes to the length and format of certain types of agreements. It’s important to review all parties involved in the agreement to ensure compliance with their specific legal obligations .
Additionally, boilerplate agreement templates may not take into account specific state laws or industries that your business operates within. For example, the legal requirements for confidentiality clauses may vary depending on the industry. In some industries, non-compete clauses may not be enforceable.
As such, it’s crucial for business owners to consult with a qualified attorney before using a boilerplate agreement template and to be willing to customize it to fit their specific needs and circumstances accordingly. Some business owners try to cut costs by using boilerplate agreement templates that are freely available online, without realizing the risks involved. However, it’s essential to remember that not all boilerplate agreement templates are created equal. It’s critical to choose a reputable source and to make the necessary adjustments to ensure that it is not only tailored to your specific needs, but also complies with any necessary legal requirements in the relevant jurisdictions.
Where to Get Copies of Boilerplate Agreement Templates
Aside from starting from scratch, there are two primary ways to get access to high-quality templates: use your draft as a base and find a list of vetted templates.
In terms of using your draft as a template, it pays to have done that (or at least to have paid enough attention in law school/firm work so that you have a general idea). Drafting agreements can be extremely complex and challenging; however, you often do not need to reinvent the wheel. While all businesses can benefit from building custom agreements, just as many can improve their quality by adapting prior agreements-even those they wrote in the past—but simply never bothered to revisit to analyze for improvements. If you are not experienced with drafting agreements, there is no harm in paying a lawyer for help; an experienced lawyer can draft a well-written contract in record time.
In terms of finding a vetted list of templates, we have compiled such a list below. But when looking for an online agreement template, be sure you are getting a quality document template that you can trust. For example, you want to make sure the source is reputable. You also want to check the template’s reviews online. People who have had negative experiences will have left reviews of these template sites, whether it is in the form of a blog post or a simple review site. Some popular agreement template sites include: Law Depot, LegalZoom, Docracy, FindLaw, UpCounsel, and Law District.
Boilerplate Agreements in Practice
Boilerplate agreements prove to be invaluable in a multitude of scenarios. When it comes to transactions, it is common for boilerplate clauses to govern the relationship between the buyer and the seller of a business. Both principals know what to expect, how liability will be apportioned, and what happens in the event of a lawsuit. Not only that, but if the transaction is an asset purchase rather than a stock purchase, there are a number of boilerplate clauses that can be used to better define the asset purchase.
In commercial tenancies, boilerplate agreements help both tenant and landlord know what they are getting into and out of when a lease is signed. Lease agreements are a practical application of boilerplate agreements. Boilerplate agreements for commercial leases may outline such issues as exclusivity, operating covenants, and conditions.
Boilerplate agreements exist in almost all other commercial contracts. Various goods or services supplied in a business context are most often ordered pursuant to a boilerplate agreement prepared by the supplier . Products like software and computers, renting or leasing machinery, and providing construction services are all done unless the parties adopt a boilerplate agreement that suits their needs.
Boilerplate agreements provide the clear advantage of reducing the cost of negotiating a contract or transaction. Boilerplate agreements offer a common framework for the transaction that is easily amended to suit the needs of the parties. They improve efficiency because the parties are focused on amending the boilerplate they are using. In most cases, there are only one or two issues that are of concern. If the terms do not suit you, take a moment to wonder whether you are adopting the right boilerplate agreement template. If you cannot find one that suits your needs, it is best to start from scratch. Although it takes longer to draft a fully bespoke agreement, doing so results in an agreement that the parties understand and have every incentive to comply with.