Boilerplate Contract Clauses: Comprehensive Guide

Originally, 'boilerplate' referred to steel plates used in constructing durable boilers in the manufacturing industry, and later to standardized text used in the printing industry. Over time, the term was adopted by the legal industry to describe common, standardized clauses routinely included in contracts. 

These clauses play a critical role in defining the terms of your agreement. 

Despite their importance, boilerplate clauses are rarely modified because they are common across many contracts. This makes changes seem unnecessary and potentially limits the efficiency of the contract drafting process.

Here, we’ll discuss the boilerplate contract clauses, their advantages and disadvantages, when not to use them, and how to automate them. 

What is a Boilerplate Contract and How Does it Work?

Boilerplate contracts contain pre-drafted, standard clauses that address essential legal elements commonly found across multiple contracts – such as, termination and indemnification. These are typically located at the end of contracts and do not address the core of the contract itself. It provides a baseline of legal protection, ensuring rights and responsibilities are clear, consistent, and enforceable. 

While a contract may include boilerplate terms, an entire contract can also be boilerplate, if it is pre-written and follows a template. This type of contract may also be considered a contract of adhesion — a ‘take-it-or-leave-it' agreement in which one party sets all of the terms with no room for negotiation. For example, employment agreements or insurance contracts.

When Should You Not Use Boilerplate Clauses?

The issue with boilerplate contracts isn’t the clauses itself, but the fixed languages. Using them as static templates may not be suitable for long term, complex or high-value transactions—such as mergers, acquisitions, and joint ventures. 

These deals often involve unique financial or operational obligations that require careful negotiation and customized languages.

In these cases, it’s essential to work with legal professionals to draft tailored terms that reflect each party’s expectations, protect their interests, and reduce the risk of future disputes.

Types of Boilerplate Contract Clauses

An enforceable boilerplate contract (for that matter, any contract), should contain clearly worded clauses. Some of these apply to almost every contract include:

#1 Entire agreement

“The purpose of an EAC (Entire Agreement Contract) is to prevent the parties from being liable for any statements or representations that they have made which are not set out in the contract itself. If any heads of terms, side letters or other documents are to continue to have effect, this must be specifically stated if an EAC is included.” says Pamela Abbott, solicitor, CCW LLP.

This boilerplate clause in a contract establishes the written contract as the complete and final agreement between the parties, superseding all prior negotiations, discussions, and agreements. 

It excludes extraneous statements, representations, or promises not explicitly included in the written terms, ensuring clarity and legal certainty.

📝 Wording Example

“This Agreement constitutes the entire understanding between the parties regarding the subject matter hereof and supersedes all prior discussions, agreements, or understandings, whether written or oral, relating to such subject matter. No amendment, modification, or waiver of any provision of this Agreement shall be effective unless made in writing and signed by both parties.”

Severability

Severability clause ensures the contract remains valid if the court deems certain parts unenforceable. This clause is particularly important in long and complex contracts where there’s a high possibility that a provision could be ruled invalid. 

Severability is the legal equivalent of a game of Jenga: if you pull out one plank, will the entire tower fall?

For example, if a contract contains an overly broad non-compete clause that a court strikes down, the severability clause allows the rest of the agreement, such as payment terms or confidentiality obligations, to remain enforceable.

📝 Wording Example:

“If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, such provision shall be severed from this Agreement, and the remaining provisions shall continue in full force and effect. The parties agree to replace any invalid provision with a valid provision that most closely reflects the original intent of the invalid provision.”

Governing law and jurisdiction

The clause specifies which jurisdiction's laws will apply to the interpretation and enforcement of the contract. This means that if any dispute arises, the parties agree that a particular state or country's law will govern the contract, irrespective of where the disagreement occurs. It provides certainty especially for companies involved in international trade or working across borders.

📝 Wording Example:

“This Agreement shall be governed by the laws of [State/Country], without regard to its conflict of law principles. Any disputes shall be resolved exclusively in the courts of [City, State/Country], and the parties consent to the jurisdiction of such courts.”

Force majeure 

This clause frees parties of a contract from liability when an unforeseen event prevents one or both of them from fulfilling their contractual obligations. It typically includes events like natural disasters (earthquakes, floods), wars, strikes, or government actions that make performance impossible or illegal.

Consider the JN contemporary Art LLC v. Phillips Auctioneers LLC case for example. Phillips Auctioneers sought to terminate the deal to sell Rodolf Stingel painting on behalf of JN contemporary due to the 2020 pandemic. The court found that the COVID-19 pandemic fell under the force majeure clause as a "natural disaster," due to its unprecedented disruption

📝 Wording Example:

“Neither party shall be liable for delays or failure to perform due to causes beyond their control, including but not limited to natural disasters, pandemics, war, or government actions. The affected party must notify the other and take reasonable steps to mitigate the impact. If the event lasts longer than [specified time], either party may terminate the contract without further liability.”

Indemnification

This clause requires one party to compensate the other for specific losses or damages, often arising from a breach, negligence, or misconduct. The application of indemnification clauses depends on the jurisdiction, as laws governing the scope and enforceability of such provisions vary widely.

Indemnification clauses typically fall into two categories:

1. Unilateral Indemnification: Only one party agrees to indemnify the other, commonly used when one party is at a greater risk of incurring losses.
2. Mutual Indemnification: Both parties agree to indemnify each other, often found in agreements where risks and liabilities are shared more evenly.

For example, a property owner hires you to renovate a house but pressures you to complete the work in less time than you usually require. If the rush leads to potential property damage, including an indemnification clause in the contract can free you from damage claims.

📝 Wording Example:

“[Party A] agrees to indemnify and hold harmless [Party B], its affiliates, officers, and employees, from and against any and all claims, damages, losses, liabilities, and expenses (including reasonable attorney’s fees) arising out of or in connection with [Party A]'s breach of this agreement, negligence, or willful misconduct. Similarly, [Party B] agrees to indemnify and hold harmless [Party A] from any claims, damages, losses, liabilities, and expenses arising out of [Party B]'s breach, negligence, or willful misconduct.”

Dispute resolution

A dispute resolution clause aims not only to resolve conflicts outside of courts while providing fair, efficient, and legally sound solutions. There are a lot of dispute resolution methods that you can choose according to the dispute’s nature, the relationship between both parties, and the potential for mutually agreeable solution. 

Various dispute resolution methods are:

• Negotiation: Informal and direct discussions between parties to resolve issues. It’s flexible and cost-effective but can fail without cooperation
• Mediation: Neutral third party facilitates negotiation, aiming to help both sides find a mutually acceptable solution. It’s confidential and relationship-preserving but non-binding unless agreed upon
• Arbitration: Neutral third party (arbitrator) makes a binding decision after hearing both sides. It’s faster than litigation but offers limited opportunities for appeals

📝 Wording Example:

“In the event of any circumstances that materially impact the ability of either party to fulfill their obligations under this agreement, the parties agree to first attempt to renegotiate the terms of the agreement through good-faith discussions. Such renegotiations must commence within [X] days of written notice by either party. If the renegotiation does not result in a mutually acceptable resolution within [Y] days, the agreement may be terminated by either party. The terminating party must provide [Z] days’ written notice of intent to exit. Upon termination, both parties agree to fulfill any outstanding obligations and comply with the exit procedures outlined in this agreement.”

Renegotiation and Exit

Renegotiation will help you to revisit and modify original agreement terms after a specified period or when specific events occur such as market fluctuations, economic or regulatory shifts. This clause offers flexibility when adhering to the original term becomes difficult or undesirable.

An exit option will help you to terminate the agreement under agreed conditions. This ensures neither party is indefinitely bound to terms that might become untenable or unfair if renegotiation fails.

📝Wording Example:

“If there is a significant change in market conditions, laws, or other unforeseen events that affect performance, either party may request a renegotiation of the terms of this agreement. The parties agree to negotiate in good faith to amend the terms, including pricing or schedules, as necessary. If renegotiation is not agreed upon within [X] days, either party may terminate the agreement with [X] days' notice without further liability.”

Why Should You Use Boilerplate Clauses?

Drafting or reading a boilerplate contract is not fun. A former federal judge Richard Posner admitted back in 2010 that he signed a 100-page home equity loan agreement without reading it. 

But Boilerplate contracts simplify contract creation, reduce legal costs, and ensure consistency across agreements.

Boilerplate agreements: 

1. Save time: You can avoid negotiating terms from scratch every time you enter into an agreement. Your legal team can now focus on the unique aspects of the contract rather than common clauses. This will streamline contract generation leading to faster turnaround times.
2. Ensure consistency: All of your contracts will be the same. One employee’s contract would not be different than another’s (obviously the salary would be different!). 
3. Reduce legal costs: You can save legal fees because most of the language is pre-approved and doesn’t require a lot of oversight. For example, a standardized indemnification clause would mean that you don’t have to draft them from scratch. 
4. Provide legal protection: Courts have built strong legal precedents around boilerplate clauses ensuring that it is more predictable. Relying on them poses less risk of misinterpretation and voidability in dispute cases.

📌Note: Not all boilerplate clauses are necessary for every boilerplate contract—it depends on the agreement type. If you're unsure which clauses to use, it's advisable to consult a legal expert.

Common Mistakes People Make With Boilerplate Contracts

Here are some mistakes that can make boilerplate contracts ineffective.

Lack of specificity

Boilerplate provisions don’t always get enough attention during the drafting, leading to broad and vague language. This opens the door to multiple interpretations, leading to misunderstandings and disputes.

For example, in Dwyer Ltd vs Fredbar Ltd (2021), the COVID-19 pandemic caused significant disruptions to business operations. Mr. Bartlett of Fredbar Ltd invoked the force majeure clause, citing his need to self-isolate. However, the franchisor, Dwyer Ltd, argued that plumbing services could still be offered despite the lockdown. While the court upheld the clause as valid under the circumstances, the legal battle could have been avoided if the clause had been clearly defined in the contract.

💡Pro Tip: When drafting boilerplate provisions, ensure they're clear and specific. While customizing them for every deal may not be feasible, tailor them for high-stakes, complex, and long-term transactions to address unique needs and reduce risk.

Failure to reflect changing laws and regulations

Laws and regulations change frequently, particularly in industries like finance, energy, or technology. When a boilerplate clause fails to account for these changes, it can place an undue burden on one party, forcing them to comply with new legal requirements. Also, if disputes arise, courts may enforce the contract's original terms, even if new laws make performance more costly or impractical. 

For example, in Canary Wharf v. European Medicines Agency (2019), the UK’s exit from the EU (Brexit) forced the European Medicines Agency (EMA) to relocate. EMA argued that the lease had become impractical, but the court ruled that Brexit did not frustrate the contract, as it wasn’t entirely unforeseeable. If EMA had included a break clause in anticipation of changing laws, they could have terminated the lease early, potentially avoiding these complications.

💡Pro Tip: To mitigate risks from legal or regulatory changes, add flexible boilerplate clauses like:

• Renegotiation clauses (to adjust terms when laws change)
• Break clauses or early termination clauses (to allow exit if performance becomes impractical)
• Force majeure clauses (to excuse non-performance due to unforeseen events like legal or political changes)

Non-negotiable terms

The party drafting the contract often pre-writes the boilerplate terms in a way that heavily favors them, leaving the other party with little choice but to accept. This can lead to an imbalance of power and potentially render the contract or certain clauses unconscionable if challenged in court. 

For example, in Baltazar v. Forever 21 (2016) California Court of Appeal for the Second Appellate District did not uphold an arbitration agreement in an employment contract that allows both parties to seek provisional relief in court during arbitration. The plaintiff argued that the agreement was unconscionable because employer, Forever 21, is more likely to use provisional relief clauses for claims like trade secret misappropriation. The court sided with the plaintiff, stating that the employee had no meaningful choice but to accept the clause, given the disparity in bargaining power between the employer and employee.

💡 Pro Tip: To avoid issues of unconscionability, ensure that boilerplate clauses are fair and transparent. As the drafting party, allow the other party an opportunity to review, ask questions, and propose changes to promote fairness and reduce the risk of challenges.

How Does Docupilot Help Automate Boilerplate Contracts? 

Boilerplate agreements with low risks are efficient to create with templates. However, templates require manual data entry for names, dates, and jurisdictions, which can be time-consuming and error prone.

This is where contract automation tools like Docupilot shine. With this tool, you create dynamic templates to fully customize your contracts on autopilot.  

Sign up to set it up in three steps.

1. Create a template

Start with a pre-drafted boilerplate contract for reuse. You can upload your existing boilerplate contract template onto Docupilot, choose from a library of pre-existing templates, or draft one from scratch using our rich formatting tool or AI template creator.

To use the AI template creator, simply click on the AI template creator icon on the Dashboard.

In the AI template creator page, write a prompt specifying all essential boilerplate clauses. For example, to create a lease agreement, you can use this prompt: 

"Create a comprehensive residential lease agreement with the following clauses: Parties Involved, Property Description, Lease Term, Rent Payment, Termination and Renewal, Default and Remedies, Dispute Resolution, Force Majeure, and Entire Agreement."

Here’s the result.

Once you’re satisfied with the generated contract, copy the source code and return to your Docupilot Dashboard to create a template.

In the template editor, click "Source" and paste the source code.

Now you have your template! You can further customize it using the rich formatting tool.

2. Add merge fields

Merge fields act as placeholders in the template, enabling you to customize variable data like names, address and currency. You can access this feature in Docupilot by clicking the curly bracket icon in your template editor. This shows the types of merge fields which include token, condition, loop and table. 

Using Tokens, for example, you can insert data fields such as names and addresses for each contract.  The good news is that the AI has already added these fields where necessary, so you may just need to adjust or add a few more if needed. 

Also, you can use the advanced conditional logic field to add or remove boilerplate clauses based on the contract type. For instance, the system can automatically insert jurisdiction-specific clauses to match the employee's location.

3. Integrate with data sources

With Zapier and Make, Docupilot allows you to integrate with your data sources like CRMs (like Salesforce and HubSpot), and databases (like Excel and Airtable). This connection pulls client-specific or contract-specific information into your templates to create personalized agreements whenever it receives a trigger.  

Docupilot: Improving Your Boilerplate Contract Creation Process

As you’ve seen, boilerplate clauses may be standard, but they’re far from unimportant.

To ensure effective contracts, customize boilerplate clauses to reflect the specific needs of your agreement, account for changing laws, and maintain openness to negotiation for a more equitable partnership.

Do remember that relying solely on templates or automation tools can overlook the unique nuances of complex or high-value agreements, leading to contract breaches and disputes.

If you’re looking to automate low-risk contracts with minimal changes, consider Docupilot. Sign up for a 14-day free trial to start experiencing a more efficient contracting process.