Today, we finish up our series on how to read a contract. We’ve learned to…
- Always draw out a flowchart so you know what is missing from the contract
- Think through the worst-case scenarios first
- Make sure that certain key terms are spelled out clearly
So, today we’ll cover our final Lesson #4: Boilerplate IS Important
How many times have you looked through a contract, seen how long it is, and just skipped over the boilerplate at the end? Even lawyers tend to do this too often. But, as always, the devil is in the details. Boilerplate language can make a BIG difference in your contract. So, here are some things to look for in your boilerplate:
“No Joint Venture” Clauses. These can be extremely important in making sure the parties are not perceived by the outside world to be in business together. Business partners are liable for the actions of their other partners. So if you don’t want to be liable for everything the other party does, make sure you have a “no joint venture” clause in your contract.
“Notice” Clauses. Every contract needs to clearly state how each party should provide the other with written notice. This clause should list who to mail notices to (e.g. to the attorneys only, to the registered agent of each party, to the CEOs, etc.) and how the notices should be mailed (e.g. regular mail, certified return receipt requested, courier delivery, personal service, etc.).
“Modifications and Amendments” Clauses. Make sure your contract states that it can only be amended in writing by both parties. You would be surprised at how many contracts miss this provision, and how much of a heartache this can produce.
“Governing Law and Venue” Clauses. Make sure your contract clearly states where each party will sue if the need should arise. If you don’t want to be sued in the other party’s home state (or home county), make sure you delineate where the parties must sue.
“Merger/Entire Agreement” Clauses. Finally, make sure your contract states that this contract encompasses all prior agreements, and that no other agreement exists between the parties. This is important so that one party cannot later claim that “Joe told me XYZ, and even though it’s not in the contract, I’m going to hold you to that.”
Of course there are other boilerplate provisions that can be vitally important to contracts. However, these are the most common, and are the ones you’ll want to look out for in each of your contracts.
I hope this series has been helpful for you. If you ever need to have a lawyer review your contract (or draft a new one), give our Dallas Business Lawyers a call at 214-236-2712.