- Anmol Trehin
7 Common Boilerplate Clauses and Why They're Important
Boilerplate clauses are standard provisions commonly included in commercial contracts. They are used to establish a common understanding between the parties to a contract. The purpose is to protect the rights of the contracting parties. As such, these clauses often clarify the language used in the contract, establish the default terms for issues not specifically addressed in the agreement, and specify the jurisdiction where any legal disputes will be resolved.
Oftentimes, boilerplate clauses are added to the end of the agreement at the 11th hour of negotiations, hastily drafted, and barely glanced at during contract review. However, these dispositions should be carefully drafted as they could have important implications for the parties. Before signing a contract, we strongly recommend that you have a business lawyer review your contract to help you understand your rights and obligations.
Today we’ll cover some of the most common boilerplate clauses found in Quebec commercial contracts.
1. The Entire Agreement Clause
One common boilerplate clause is the "Entire Agreement" clause. This clause states that the written contract contains the entire agreement between the parties and that any prior negotiations or discussions are not binding. This clause is important because it prevents parties from relying on any oral agreements or understandings that were made before the written contract. Essentially, this aims to confine the parties, and the court in case of litigation, to the four corners of the document.
Based on the circumstances, certain judges have upheld the entire agreement clause to exclude oral agreements that were made by the parties. While in other cases, the court decided to strike down this clause to allow oral representations made prior to signing the contract. If you intend to rely on oral agreements or representations that are made outside of the written contract, it’s important to review this clause carefully.
2. The Governing Law Clause
Another important boilerplate clause is the "Governing Law" clause. This clause specifies the law that will govern the contract and any disputes that arise from it. In Quebec, the governing law is typically the laws of the province of Quebec (like the Civil Code of Quebec) and any applicable federal laws. This clause is important because it ensures that both parties are subject to the same legal framework.
3. The Choice of Jurisdiction Clause
A related clause is the "Jurisdiction" clause which specifies the court or tribunal that will have jurisdiction over any disputes that arise from the contract. In this province, this clause is typically used to specify that the Quebec courts will have jurisdiction. This allows the parties to be aware of which legal system they are subject to and where they must bring their grievances.
This is particularly important to pay attention to, especially where the contracting parties are not from the same province. Should any disagreements arise you do not want to be stuck having to go to a different province or state to bring a case against your co-contracting party. In certain cases, the courts have disregarded the choice of forum clause while in other cases they have refused to hear a case based on the choice of forum. This will depend on the facts and particularities of each situation so it is better to be aware of the choice of jurisdiction.
4. The Severability Clause
The "Severability" clause states that if any provision of the contract is found to be invalid or unenforceable, the remaining provisions will remain in effect. This ensures that the contract remains valid even if a clause is found to be unenforceable.
5. The Assignment Clause
The "Assignment" clause is another common boilerplate clause found in Quebec commercial contracts. This clause specifies whether the parties can assign or transfer their rights and obligations under the contract to another party. It clarifies the parties rights and obligations under the contract and ensures that any third party who assumes those rights and obligations is bound by the terms of the contract. On the other hand, this clause can also be used to prohibit the assignment of rights and obligations entirely.
6. The Amendment Clause
The "Amendment" clause specifies how the contract can be amended or modified. In Quebec, this clause typically requires that any amendments be in writing and signed by both parties. This is done to ensure that any changes to the contract are made clearly and formally.
7. The Notices Clause
Finally, the "Notices" clause specifies how notices and other communications between the parties will be made. This clause typically requires that notices be sent by registered mail or delivered in person. It can even include electronic communications like email with a specified email address. More fleshed-out clauses will also include when a notice is deemed to be received by the other party. This clause is important because it ensures that both parties receive important information in a timely and reliable manner.
In conclusion, boilerplate clauses play an important role in Quebec commercial contracts. They serve to clarify the rights and obligations of the parties to the agreement and ensure that any disputes are resolved fairly and efficiently. Parties need to pay close attention to these clauses and ensure that they understand what is included in any commercial contract they enter into. By doing so, they can avoid potential misunderstandings or disputes that may arise in the future. Book an appointment with our Montreal based business law firm today. We are available for virtual consultations across Quebec.