Contract Boilerplate
What is a Boilerplate?
You might have heard of a “boilerplate” before. Boilerplate refers to the miscellaneous provisions in a contract which are in every contract. However, boilerplate provisions do vary from contract to contract, and the terms of a boilerplate provision may vary. So, the issue in boilerplate provisions is the content that you want for each provision. The content of some provisions is negotiated between the attorneys. I am going to focus on one boilerplate provision that will provide an example of how important the terms of a provision can be.
Boilerplate Provisions:
Usually there will be a litigation provision. This boilerplate provision can have huge implications. It states where a suit will be filed, if one becomes necessary, and which state’s laws will be used.
Location of a Suit
If you have two parties that do not do business in the same county, the location of a suit will result in some additional expense of the litigation for one party. More importantly, it determines the inclinations that the judges may use during the litigation. For instance, some counties are known to be very conservative, and as such, the judges in that county are more likely to be conservative. There are exceptions, but generally this can be true. There are many considerations that have to be used to determine the likely nature of the judges, but location of the suit is a very important factor. The same can be true with respect to juries. For instance, if a county is very conservative, the jurors may be conservative in deciding who wins, and how much the other party has to pay.
The location of a suit can even be more important, when the parties to a contract live in different states or countries. The travel expense can be large. The expense of learning the tendencies of judges and juries can be large, if this can be done at all. When the location is picked by one party, that party will likely know the local factors that may affect who generally wins, and who generally loses. You will not.
Choice of Law (Which State’s / County’s Law Will be Used?)
The second term in a litigation provision is the choice of law. Which state’s or country’s law will be used in determining the outcome of a litigation? The law does vary from state to state, or country to country. Choosing between Texas law and New York law can be a very important decision. You know Texas law, but you do not know New York law.If the choice of law is not made by the most powerful person in the negotiation of the contract, it pays to know something about the other state’s laws, before a decision is made.
Pay Attention to the Terms of a Litigation Provision
And the terms of a litigation provision are very important. I frequently see clients who never thought a contract would be broken, encounter a serious breach of the contract. The question is whether to litigate. If the party who breached has its own location and the use of its own laws, a big question arises as to the cost of the litigation, and, more importantly, who is likely to win. When you are likely to win, a good settlement is easy to reach.
