Boilerplate Lingo in Contracts
Previous articles of mine dealt with “must-have” provisions in contracts. However, ever wonder what some of the boring “blah-blah” is, usually at the end of the contract? The kind of stuff that seems like it’s in everything you ever signed? Let’s talk about some of it.
Disclaimer: The following information does NOT constitute legal advice and is only for general educational purposes. Each situation is different and specific legal issues usually require additional research and investigation, so do not rely on this article to address a particular legal issue; use this as a starting point to gain a general understanding.
That just means where you are sued. Why is this important? Say you live in NYC. You do virtual software services for someone or a company in Nebraska. You do $20,000 of work and they don’t pay you. Where to sue? If the contract doesn’t say, you have a good chance of suing them in NYC or Nebraska, not so much in any other state. So far so good. However, if your defendant is small enough they might be able to make a legal motion to move the case Nebraska (like NYC dating, it’s complicated). That’s not so hot. Also, worse, if you signed *their* contract, and it said, “all disputes must be litigated in blah blah county, Nebraska, then I hope you are ready to earn some frequent flier miles. The way to solve this is to make sure you have a similar provision that says it’s where you are located.
This is closely related to Venue. This means whose law applies? Nebraska, New York, or someone else? Generally parties can agree to use whichever law they want, however, sometimes a court will say “um, no, there needs to be a reasonable relation or purpose as to why you selected this body of law.” So, NY-NE contracts probably won’t get away with using the law from New Zealand, but hey, like Lotto, you never know, the court might not care. However, if you are going to try something that much of a reach, you might want a back-up clause in there that says something like, “in the event New Zealand law is found not to apply, both parties agree to use New York law.” You will also always see something that says “without regard to choice of law provisions.” Again, it’s complicated but it has to do with the French (haha, sort of, I did you not, it’s called “renvoi”) to make sure you use what you intended.
This often reads, “in order to be effective, notice must be sent to the other party via certified mail, return receipt” etc. This stems from a long tradition of making sure people get notice you are angry or disappointed (i.e. suing them or just terminating your relationship). However, since we no longer move at the speed of slow and hazy summer July in 1866 or even 1956 or even 1986, many are updating their contracts to permit service by emails. Courts have more and more receptive to this. As a precaution, I usually include language that says “obvious bounces or indications of failure” negate service, meaning if the send clearly receives indication the email did not go through, it doesn’t count.
“Any right so waived is only to the extent so indicated, and only for a singular time and not on a consistent basis.” Basically, say you are late for a single payment. And the other party says, “no problemo, just pay me next Tuesday for your hamburger today” (look it up), that doesn’t mean you get free hamburgers for the rest of your life, or that you can always pay a week later. It means that one time, the other party waived their right to charge you on time. Next time, you might not be so lucky.
You ever see that beauty, where they try and charge you for x% interest “or the maximum permitted under the law?” Wonder why the last part? There is something “usury” in almost every state. Usury is when someone charges more than they are able to under the law. However, the usury laws can be very complicated, and it’s not uncommon for someone accidentally to violate them. If they do, that’s a very big no-no. Penalties can range from reducing the amount of interest, to forgiving some or all interest, even the entire debt and sometimes even jail for the person committing the usury. Therefore, to avoid this, they put in the last line, so they recognize that if the law puts a limit, that’s what they meant. It’s a way for the person to tell the court, “hey, I didn’t mean to violate the law, by all means, knock it down to whatever the State feels is fair.” This does NOT always work, and sometimes courts are not amused. However, it is a great way for the person challenging the rate to lower it, if they are correct and the rate is too high.
And there you have it, some of the more common “boilerplate” you will see … hope that helped!