Nothing can land your business in legal hot water faster than a boilerplate document. No matter how generic you think the deal or transaction you’re entering into is, boilerplate documents can often have terms unfavorable to you — or leave out essential provisions. In other words, the thing you thought would save you time and money can cause you to spend substantially more time and expense in litigation.
What is a Boilerplate Document?
A boilerplate document comes with general, standardized language, text, and procedures that can be used in many situations without making major modifications to the original. Boilerplate language can include clauses that state if there is ever a legal dispute, the losing party must pay the attorneys’ fees of the prevailing party.
Boilerplate documents also commonly include these types of clauses:
- Mandatory arbitration
- Liquidated damages
- Force majeure
- Merger clause
- Choice of law
- Automatic Renewal
- Right to cure
A boilerplate document should be used only as a template. The clauses in a boilerplate document aren’t always specific enough to the needs of your business. Changes may be made to these documents to use them in different contexts. Significantly, absent any laws or conditions that might prevent a contract from being valid, courts typically enforce commercial contracts as they are written once they have been signed— even if they include boilerplate language.
The Risks of Using Boilerplate Documents
If you’re considering using boilerplate documents in your company — whether for your operating agreement, contracts with third parties, real estate purposes, or any other reason – it’s vital to use those documents with caution. Many people mistakenly view boilerplate language as unenforceable. While boilerplate documents are often used by companies to increase efficiency, boilerplate provisions come with risk. Failure to review and tweak the terms of a boilerplate agreement can result in an outcome you had not expected.
Many parties might overlook boilerplate provisions if the rest of the contract is what lays out the performance obligations of the parties. However, the enforceability of the obligations may depend largely or wholly upon the standardized language. Boilerplate clauses can contravene the goals of your business, and you might have little or no recourse once the contract is executed.
Before entering into any contract, it’s imperative that a party take the time to carefully review and understand the terms and ramifications of the agreement. Before a contract is signed, it can be negotiated, challenged, and revised. Problematic provisions can be changed to be more balanced and language can be changed when the terms are too one-sided. Spending the time to ensure the contract is fair from the outset can save substantial time and expense that could otherwise be spent in litigation later.
Contact an Experienced New York Business Attorney
Contractual language can be complex. A knowledgeable business law attorney can help ensure your rights and interests are adequately protected. Brinen & Associates is dedicated to providing reliable representation to business owners for a wide variety of business matters. Call (212) 330-8151 or send us a message to learn more about how we can help.