Counsel beware. Lawyers who reflexively plug boilerplate terms into their contracts, without thoughtful consideration as to whether those terms are warranted or appropriate under the circumstances, risk unforeseen consequences that could seriously impair the parties’ benefit of the bargain. Black’s Law Dictionary defines boilerplate as “ready-made or all-purpose language that will fit in a variety of documents” or as “fixed or standardized contractual language that the proposing party views as relatively nonnegotiable.” By their very nature, boilerplate terms appear innocuous and typically go under the radar until the business terms are set. However, an inartfully drafted indemnification or a seemingly benign arbitration clause could spell disaster for the unwary general counsel.
There are two basic types of boilerplate common to most commercial settings: risk management and allocation issues (e.g., indemnification, limitation on damages, shifting responsibilities for legal fees, merger clauses) and process and procedural issues (e.g., arbitration, mediation, notice requirements, choice of law, venue and jurisdiction.)