Boilerplate

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A work creation scheme for our learned friends.

At the JC we define boilerplate expansively, and that is to say “anything that didn’t make it onto the cocktail napkin”. Those terms, thrashed out over Martinis and peanuts at three o’clock in the morning — that’s the deal, and we legal eagles have little to say about it, assuming it doesn’t actually break the law. The remainder, be it the classic boilerplate that fills our anatomy, or the “legally vital protections for our client” — the events of default, the termination events, the close-out netting provisions, the indemnities, the security waterfalls — it is all, in this wider sense, boilerplate: it is there simply to avoid doubt.

Boilerplate boilerplate

Business at the front

• Recitals and preamble
• Interpretation and construction
• Definitions
• Scope

Party at the back

• Representations and warranties and covenants
• Notices and communications
• Governing law and jurisdiction
• Miscellaneous

The representations and warranties, covenants, notices, governing law, counterparts, entire agreement, amendments, process agent appointments, Contracts (Rights of Third Parties) Act 1999 exclusions, meaningless indemnities — all that pointless heft down the back of the agreement that no-one — least of all the client — reads, that makes a simple agreement complicated and that can swing around and bite you when you least expect it.

If we assume that a legal provision, however standardised, does something — that is to say, it alters the state of legal affairs between the merchants from the one that would prevail if nothing were said; and, accordingly, boilerplate reallocates risk away from its natural destination — then the question at the top of a draftsperson’s mind when assembling a draft ought to be, “is such a perversion of the natural order of things justified, and if so, why? How has the common law managed to get standard things so badly wrong?”

So it transpires, that much of the litigation concerning boilerplate — and there is a disheartening amount if it — boils down to a fight between one party arguing for a commonsense commercial outcome — that is, the one that accords with the understanding that passed between the merchants during their commercial discussions — and a freakishly distorted outcome with no equitable rationale but that is vouchsafed by creative application of boilerplate terms to which no one paid the blindest bit of attention when the contract was being negotiated.

You may call this a jaundiced view, but really, if boilerplate is designed only to reinforce the settled position of the common law, what really does it do other than adding heft?

See also

• Flannel