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Boilerplate clauses are the standard clauses which typically appear at the end of commercial contracts. They are thought to add certainty and are often not negotiated by parties. Their purpose being that if the contract is disputed in the future, these clauses will help to limit the dispute.
An example of a commonly used boilerplate clause is an ‘Entire Contract’ Clause. This clause will be found at the end of almost any contract. Its purpose is to limit the contract to what is contained within it. Therefore, the parties can’t rely on promises or arrangements made prior to the contract, for example, by email or during the initial negotiations.
It encourages the parties to ensure that, if any special arrangements have been agreed, they are clearly set out in the contract itself. This is considered to be a vital clause for contracts and once included, is thought to make the contract conclusive as to what has been agreed between the parties.
The impact and certainty of an ‘Entire Contract’ clause was considered in the recent case of Sparks V Biden 2017. This case revolved around an overage contract relating to the purchase of land for development.
The Contract provided that the purchaser would purchase the land for a small sum and redevelop this into a housing estate. Once the houses had been built, the purchaser would sell the properties and pay a further sum to the Seller.
In this case, the purchaser was attempting to avoid making an additional payment to the seller after the development was completed by not selling the properties built. The seller sought to argue that it had been agreed during the course of negotiations that once built; the houses would be sold within a ‘reasonable’ time period. However, this was not a term of the contract and an ‘entire contract’ clause was contained. The buyer therefore argued that the seller could not rely on these pre-contract negotiations.
The judge considered the evidence and, with regards to the entire contract clause, stated:-
‘The fact that there is an entire contract clause is a factor against implying the term sought to be implied by the seller, but, as Mr Duckworth recognises, only a factor. I do not regard it as a very strong one on the facts of this case’.
In simple, the entire contract clause was overruled and pre-contract negotiations were considered by the judge who ultimately found in favour of the seller by implying a term into the contract that the Buyer had to sell the houses within a reasonable period of time.
Therefore, whilst boilerplate clauses are important terms of contracts, they can be overruled where one party is seeking to escape the duties contained within the contract.
This highlights the need to carefully consider the terms of the contract and ensure that they are clear and contain all of the parties’ agreements. If you are in the process of negotiating a contract, you should seek advice from an experienced commercial solicitor.
For further information relating to any of the points contained in this article, please contact Oliver Zaki on 01329 282 841.