When business owners review a contract, attention naturally goes to the deal terms: price, payment and deliverables. Toward the end of the agreement, however, is a collection of provisions often labeled "boilerplate" or “miscellaneous.” Because they appear in nearly every contract, many people assume they are routine and not worth much discussion. In reality, many costly contract disputes turn on language that received the least attention during negotiation. These provisions frequently determine how disputes are resolved, who pays legal fees, whether rights survive after termination and even whether a lawsuit can proceed. Here are some provisions worth a little extra thought:
Choice of Law: Which Rules Apply?
A contract's governing law determines which state's legal rules will be used to interpret and enforce the agreement. Those rules can differ significantly on issues such as available damages and enforceability. Before accepting another state's law simply because it appears in the draft, consider whether it creates advantages or disadvantages for your business.
Forum Selection: Where Will a Dispute Be Resolved?
Even if the law is favorable, the location of a dispute matters. A forum selection clause may require litigation in a particular state or federal court or require arbitration instead of litigation. The choice affects travel costs, convenience, litigation strategy and overall expense. Venue should be a business decision, not an afterthought.
Entire Agreement Clauses
An integration, or "entire agreement," clause states that the written contract represents the parties' complete agreement. This can prevent either side from later claiming that verbal promises, emails or earlier negotiations changed the deal. If an understanding is important, it belongs in the contract itself, not in unincorporated documents.
Amendment Clauses
Most contracts require amendments to be in writing, but business relationships often evolve through emails, text messages or informal handshakes. Parties may begin operating under new terms without formally updating the agreement. That disconnect creates fertile ground for disputes. Businesses should ensure that operational changes are documented consistently with the contract's amendment requirements.
Notice Provisions
Many contracts require formal notice before exercising important rights, such as terminating the agreement or declaring a default. The notice clause specifies how notice must be delivered, when it becomes effective and where it must be sent. Something as simple as sending an email when certified mail was required, or using an outdated address, can result in losing valuable rights.
Assignment Clauses
Can one party transfer the contract to someone else? Assignment provisions address whether contracts may be assigned during mergers, acquisitions, reorganizations or asset sales. They may also distinguish between assigning contractual rights and delegating contractual duties. Businesses contemplating future transactions should review these provisions carefully.
Force Majeure
The COVID-19 pandemic reminded businesses that unexpected events can disrupt even the best-planned agreements. Force majeure clauses allocate the risk of extraordinary events. Well-drafted provisions define which events qualify, require reasonable mitigation efforts, establish notice obligations and clarify whether performance is temporarily suspended or the contract may be terminated.
Survival Clauses
Termination does not necessarily end every contractual obligation. Survival clauses identify which provisions continue after the relationship ends, such as confidentiality obligations, payment responsibilities, intellectual property protections, indemnification or audit rights. If these provisions are not expressly preserved, uncertainty may follow.
Severability
If one provision is later found unenforceable, a severability clause helps preserve the remainder of the agreement. Depending on the applicable law, courts may strike only the offending language or modify it to make it enforceable. Either way, the goal is to avoid invalidating the entire contract because of one defective provision.
Confidentiality
Confidentiality provisions also deserve careful attention. They should clearly distinguish between protecting confidential business information and keeping the existence or terms of the agreement confidential, while allowing necessary disclosures required by law, regulators, or courts.
The negotiated business terms define the relationship when everything goes well. Boilerplate provisions often determine what happens when things do not. Giving these clauses careful attention during drafting can prevent costly surprises and provide greater certainty if a dispute ever arises. And when the fine print raises more questions than answers, business owners should not hesitate to consult qualified legal counsel. As the old saying goes, an ounce of prevention is worth a pound of cure. To contact Jamie Tract to discuss these or other matters, send an email to jtract@parsonsbehle.com or call 775.323.1601.
