In contracts, what is meant by:
Often people refer to certain provisions of an agreement as “boilerplate.” For example, it is quite common that a client will say to me “The agreement I need you to review is mostly boilerplate, so it should not take long to review.”
What do people mean by “boilerplate?”
Many years ago, “boilerplate” referred to extra metal plates that were wrapped around a boiler to limit damage if the boiler blew up. They were often unneeded and used more for show than for effect.
As commonly used today, “boilerplate” refers to provisions or sections of a contract (1) that are “standard,” (2) don’t much affect the contract’s “important points,” (especially those that refer to money matters), and (3) so, don’t really need to be reviewed carefully.
Beware: each of those three statements are wrong, more wrong, and even more wrong, and it’s better you learn that here and now, and not “the hard way.”
First, there is no such thing as a “standard” contract clause or “standard” contract language because every employee, every employment relation, every word and every punctuation mark in a contract or agreement is different, and so all need to be carefully read and considered. Missing a single “black dot” in a contract is the legal equivalent of missing a single “black dot” on an x-ray.
Additionally, when reviewing a contract, you must also consider what might be “missing” from it, and how what is “missing” might pose a threat to you and your interests.
Many times I have seen seemingly innocuous provisions in agreements that – intentionally or not – change the expressed intentions and effect of the contract.
Here are some common contract provisions that people often mistakenly call “mere boilerplate,” and in doing so endanger themselves and their interests:
“Section Titles”: This “boilerplate” provision usually – but not always – provides that the headings or titles of paragraphs have no effect in interpretation, but are just there for the sake of convenience. So why read it carefully? Because sometimes the drafter omits the tiny word “no,” and thus changes the entire meaning and effect of the section, to its very opposite, that is, that the section titles are of meaning, and thus need to be considered in interpreting the agreement. If you don’t read the full paragraph carefully, you may misunderstand what the agreement means, leading your mind and your analysis astray.
“Entire Agreement”: This “boilerplate” provision usually – but not always – provides that only the words inside this agreement count, that nothing outside of it makes any difference. Why is reading this carefully important? Because sometimes other documents are inserted into this paragraph to make it say, for example “The words in this agreement and in the non-compete agreement previously signed by the parties, are and will continue to be binding.” If you failed to see that italicized language, your “boat” may be “sunk” if you get a new job, and your new employer gets a letter alleging you are violating a non-compete agreement. OUCH!!
“No Unsigned Agreements or Amendments”: This provision, found in many employment agreements, usually says that no oral or unsigned agreements can bind the employer, but only written and signed agreements can do so. Sometimes, though, this is added, without most people noticing: “by the employer’s CFO or CEO.” So, if this agreement, the one that contains this very provision, is not signed by the CFO or CEO, but for example by the Head of HR, then this very agreement – this entire agreement – is not binding at all on the employer. Neat trick, no?
I don’t mean to make you paranoid, and I am not trying to scare you into hiring an attorney every time you have to sign a piece of paper, but I do want to shatter any myth you may have heard or been told, especially by HR, that any words or clauses of any contract can be treated casually.
So, please bear in mind, that when anyone says that “That paragraph is nothing but boilerplate,” or “Most of this agreement is boilerplate,” as soon as you can, you should put on your strongest reading glasses, and carefully read and consider every word of it. And each punctuation mark, too.
Don’t permit yourself to be misled, don’t mislead yourself.
Nor should you “save” five minutes of reading and lose, perhaps, your career, as a result.
Forewarned is forearmed.
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