The “boilerplate” contract provisions typically form the last section of an agreement, and they are typically dismissed as “housekeeping” of secondary importance. These provisions address issues such as amendments, governing law, waiver of trial, alternative dispute resolution, succession/assignment, notices, counterparts, severability, authority and merger. Dismissing these provisions as irrelevant or unimportant is a serious mistake, and as much attention should be paid to each word of these provisions as to any other portion of the document. Ignoring these sections may result in dire repercussions for one or all parties, for example when one discovers that a dispute must be litigated in another state, or that no litigation may occur until various alternative dispute resolution measures are implemented.
Amendments should only be permitted with mutual approval of all parties, in signed writing, and appended to the original agreement. Non-mutual amendments are commonly used by scam artists, individuals or companies, who intend on using that provision to unilaterally change the terms of an agreement and then attempt to bind the other signer to the changes. Although such provisions are difficult to enforce in court, and it is usually unlikely one will be sued over this type of dispute, it is possible that the threat of a lawsuit, and/or an ongoing relationship with the entity or person, will necessitate a greater expenditure as demanded by the wrongdoer. The fraudster may be counting on the need for the completion of a project or may attempt to intimidate the other side into paying more.
Governing law provisions are relatively simple, and should clearly name the state where the agreement was signed, although the parties may agree to use any state’s law to govern the agreement’s terms. If one suspects the agreement may end up in court, that party would do well to demand the governing law to be of his/her own state. If a company or person has reached out to the buyer of goods or services, then certainly the application of the buyer’s state law should ideally govern, and this should be expressed in such a provision.
Typically, severability provisions state that the agreement will survive any state/federal law changes or circumstances nullifying any provision by a governing entity, and remain in force, although without any of the invalid/nullified provisions. These provisions are probably in every agreement, and should be. The only way an agreement can be voided in whole is if the subject matter of the agreement is made illegal or it becomes impossible to complete the performances required under the agreement not due to the fault of any party.
Alternative dispute resolution is becoming commonplace. Nobody wants to spend (tens of) thousands of dollars and wait years to resolve a dispute, but the legal system is a mess, and justice is not even remotely assured. Arbitration and mediation provides a quick, relatively inexpensive, and less stressful resolution mechanism and should be considered and implemented prior to any litigation being commenced. Although in mediation compromise will result in none of the parties being fully satisfied with the resolution, in litigation, satisfaction with the resolution is likely to be far lower.
Most agreements are not assignable, although this depends on the personal nature of the agreement. If a different and competent party can perform the same or similar class of services or provide the same goods then assignment should be permitted under the right terms, because if a party cannot perform, it should be allowed to attempt to save the contract and satisfy the other party.
Each party should list a good address of record that will be deemed to be the proper location for any important notices given to the other. Notice issues come up occasionally, and providing a valid address and notice timing terms can put any disputes as to notification and receipt to rest quickly.
Each party should have the requisite authority to enter into the agreement on behalf of another, and such an attestation may bind the signer personally if he/she does not in fact have the authority. Although, at times this personal binding of the signer is useless because they may not be able to perform or pay under the agreement as required.
Merger is a topic that has had many dissertations and articles written about it. To sum up, it is a provision which negates any oral statements, promises and agreements, and incorporates or merges them into the final agreement. Therefore, if such promises or statements were not included into the agreement in writing, then they never happened. This is called the “parol evidence rule.” This rule prohibits a party from presenting evidence of promises or agreements contrary or in addition to what is in the written document, unless the agreement is ambiguous or a few other exceptions apply, such as defects in the formation of a valid contract. In short, the moral is: be sure to include all oral promises into the final written document, because more than likely 99.9% of all contracts will contain this provision.