Don't Get Burned by the Boilerplate

Just about every contract you sign contains "boilerplate" language. Salespeople wanting to move a sale along will say, "You don't need to read that — its just boilerplate." Your friends may say, "The boilerplate isn't enforceable anyway." If you don't need to read it, and it isn't enforceable, why bother with it?

The term "boilerplate" is borrowed from the old days of newspaper production, when type for syndicated portions of the paper was distributed in plates made from molten metal, or boilerplates, so it could be reproduced in multiple papers without changes. Similarly, language that is formulaic or standardized within most contracts of a particular type has come to be called "boilerplate." As a general rule, this standardization saves the parties time and trouble bargaining over details that are mutually assumed and accepted, allowing them to focus on what really matters to them in the transaction.

The average person doesn't read boilerplate language. Most people trust that the other party is acting in good faith and that the "form" language is regularly accepted by people engaged in this kind of transaction. The problem with this assumption is that standardized documents are usually written by someone who has something to gain by having you sign them. Therefore, whether by accident or design, the writer could skew the language to favor his own interests, and you could unknowingly agree to something that will complicate your life more than you anticipated. This unhappy human tendency is why the government regulates such things as insurance policies, bills of lading, retail installment sales, and commercial loans.

A court construing a standardized contract will try to carry out the reasonable expectations of the average person who enters into that type of contract. Thus, standardized terms are generally upheld unless the average person could not have expected them to be part of the agreement. However, contract terms will usually not be enforced under the following circumstances: (1) Standard terms are superseded by separately negotiated or added terms — if you added something specific to the contract that conflicts with the boilerplate, the court will probably choose the intentional term over the standard one; (2) ambiguous terms are interpreted against the draftsman — that is, if there is some question as to the meaning of a term that you didn't write, you would get the benefit of the doubt; and (3) all boilerplate terms are subject to the obligation of good faith and fair dealing, and can be unenforceable if found to be unconscionable or against public policy.

If you couldn't be expected to have any more knowledge than the average person in the area in which you're dealing, unreasonable boilerplate terms probably will not be enforceable against you. Under the same analysis, people engaged in business are expected to know more about their business area than the average person, and may be required to abide by the terms of the business contracts they enter. That's why it's always a good idea to "read the fine print." If it doesn't sit right with you, before you sign on the dotted line, talk with a lawyer who knows what is standard in your industry.

This article is intended to inform the reader of general legal principles applicable to the subject area. It is not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.

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