Key takeaway

Lawyers often treat boilerplate clauses as standard, non-critical provisions that appear at the end of a contract. However, underestimating these so-called “midnight clauses” can expose clients to unnecessary risk. As experience consistently shows, parties litigate over boilerplate clauses more frequently than over many headline commercial terms.

Almost all commercial transactions are governed by written agreements. While the operative terms tend to receive the greatest scrutiny during negotiation, boilerplate clauses are often regarded as routine, low-priority provisions and are commonly left until the final stages of drafting. Despite this, boilerplate clauses appear in nearly every contract and play a decisive role in how rights and obligations are interpreted, enforced, and disputed. In practice, these clauses can influence negotiations and, on occasion, become the central issue in litigation.

What are boilerplate clauses?

Boilerplate clauses are typically found at the beginning or end of a contract and govern how the agreement operates as a whole. Common examples include confidentiality, severability, variation, assignment, dispute resolution and governing law clauses.

They are often perceived as “standard” or administrative provisions, sometimes reviewed late at night once the commercial deal has been agreed. This perception can lead to them being overlooked or insufficiently tailored. However, boilerplate clauses frequently determine how a contract responds to unexpected events, how disputes are resolved, and whether contractual rights can be enforced at all.

Why are boilerplate clauses important to practitioners?

Because boilerplate clauses are commonly reused across contracts, their importance is often underestimated. This can create risk for both practitioners and clients, particularly given that business disputes about boilerplate provisions arise more often than disputes about the primary commercial terms..

How do boilerplate clauses allocate risk and liability? Certain boilerplate clauses, such as limitation of liability, indemnities and force majeure provisions, allocate risk between the parties. If these clauses are not carefully drafted or tailored to the specific transaction, they may fail to address the actual risks involved or, in some cases, introduce unintended exposure.

For example, limitation of liability clauses can determine the extent of damages recoverable following a breach, while indemnities can shift responsibility for losses arising from third-party claims. When treated as standard wording, these provisions can have consequences that were never commercially intended.

How do boilerplate clauses affect dispute resolution and enforceability?

Boilerplate clauses often govern how disputes are managed, including whether parties must engage in negotiation, mediation or arbitration before commencing proceedings, and which law and forum will apply. A poorly drafted dispute resolution clause can delay enforcement, increase costs, or create uncertainty as to whether proceedings have been validly commenced.

Courts generally uphold well-drafted boilerplate clauses, which can significantly advantage the party seeking to rely on them. This explains why such clauses are frequently scrutinised in litigation, despite having received limited attention during drafting. Read more on why contracts need to be well-drafted.

Why do boilerplate clauses matter for flexibility in modern contracts? Reliance on standardised boilerplate wording may fail to reflect modern contracting practices. For example, clauses may not adequately accommodate electronic signatures or digital execution platforms, creating uncertainty as to whether execution or variations have been validly effected.

Conversely, carefully drafted boilerplate clauses can provide essential flexibility, allowing parties to assign, vary or terminate agreements as commercial requirements evolve.

Conclusion

Boilerplate clauses should not be treated as an afterthought or dismissed as routine “midnight clauses”. Although they may appear secondary to the main commercial provisions, they often determine the outcome of disputes and are litigated more frequently than many operative terms. Practitioners must be conscious of the influence these clauses have and ensure that they are consistent with, and supportive of, the commercial intent reflected in the operative provisions of the contract.

Please contact the Commercial team at Barnes Law for advice on commercial contracts.

Written by Barnes Law Managing Partner Yulia Barnes.

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