Pros & Cons of Boilerplate
Clauses
Jyotsna Chaturvedi
Senior Associate
MAHESHWARI & CO.
Advocates & Legal Consultants
Telephone: 91-11-2610 1906
Fax: 91-11-2617 1201
E-mail: jyotsna@maheshwariandco.com
Major parts of an Agreement
Details of the Parties and date of the Agreement
Recitals/Preamble
Definition
Commercial Clauses
Boilerplate Clauses
Signatures of the Parties
Types of Clauses
Clauses in an
Agreement
Commercial
Boilerplate
Boilerplate -Meaning
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Word: Boilerplate is any text which can be reused in
new contexts or applications without being changed
much from the original.
Legal : A description of uniform language used normally
in legal documents that has a definite, unvarying
meaning in the same context which denotes that the
words have not been individually fashioned to address
the legal issue presented
Basic Nature
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These are basic provisions added to a contract to protect
the parties to the Agreement
It is included at the latter part of any contractual
agreement
Offers protection against things such as uncontrollable
acts of nature, any agreements that precede the actual
contract etc.
Common Business Contract
Boilerplate Clauses

Arbitration Clause: The purpose of arbitration is to
provide an alternative to litigation. It is generally quicker,
cheaper and is less formal than going to court.
Arbitration can be particularly useful in resolving
disputes that are of a highly sensitive or confidential
nature. Often a contract will have an arbitration clause
so that a dispute will be resolved by an impartial tribunal
without either party having resort to costly and lengthy
litigation. It is comparatively a speedy process rather
than following lengthy litigation process.
Contd.

Entire Agreement Clause: Inserting this clause in a
contract means that the provisions of the current
contract override any previous agreements. This stops
contracting parties legally from using oral or written
agreements made before the contract. This means that
neither party can claim to have acted based on any
statement, discussion or document not expressly
contained within the contract.
Contd.

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Force Majeure Clause: Force Majeure is a clause which
prevents the parties to a contract from being liable in the
event that circumstances outside their control stop them
from being able to undertake their obligations under the
contract. The theory behind this lies in the legal doctrine
of ‘frustration’ – that parties should not be penalized for
the actions or fault of another and which they could not
reasonably have foreseen.
Applicable Law and Jurisdiction: The clause allows for
the provisions of the contract to be governed and
interpreted by the laws of the state where you have
drawn up the contract and clears any ambiguity over
applicability of laws of particular state when there are
International or Interstate Transactions.
Contd.

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Amendments: Insertion of this clause protects from the
contract getting amended without agreement between
parties. Generally, it states that the contract can only be
amended with prior written consents from the parties.
Assignments: This is a term used to refer to the rights
and obligations of a party to a contract and the powers
of that party to pass on those rights and obligations to a
3rd party. Often contracts have a ‘no-assignment’ clause,
which prevents either party ‘sub-contracting’ their duties
under the contract.
Contd.

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Interpretation: Reference to any law or statute
includes a reference to amendment to that law or statute
and to any orders, statutory instruments or regulations
made under that law or statute.
Notices: This provides the parties to a contract with an
agreed method of communication upon the occurrence
of specific events. It is a very important provision as it
sets out the way in which parties should communicate,
and the timescales, thereby avoiding dispute later on.
Contd.

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Waiver: The failure by a party to enforce any provision of
this Agreement (Contract) shall not be treated as a
waiver of that provision, nor shall it affect the right of
that party subsequently to enforce that provision
Severance And Invalidity : If a clause to a contract is
found to be invalid, illegal or otherwise unenforceable,
this clause allows the parties to remove the clause/words
and continue performing under the contract. However
there are limits–if removal of the illegal or invalid clause
makes the contract unworkable, the contract will be
void.
Contd.

Termination : This sets out the ways in which the
contractual relationship can come to an end. This may
be at the end of a fixed term or if the contract is
breached by either party or by granting the other party
notice of termination (e.g. 30 days notice and in writing)
or if one party becomes insolvent, bankrupt or is
liquidated, or a dispute arises between them that stops
them from being able to continue with the contract.
There should be a further section in this clause which
explains what happens when the contract is terminated.
The other side of Boilerplate
clauses
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Not all boilerplate clauses are appropriate for all types of
agreements and it is important that the person who
drafts the contract has a good understanding of the
clause’s usage.
When drawing up or signing a contract, it is vitally
important that attention is paid to the wording of these
provisions
Each boilerplate clause is intended to provide protection,
and as a consequence, must be carefully worded in
order to hold up in a court of law.
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It is important to keep the language clear and concise.
Failure to include appropriate boilerplate clauses can
cause substantial damage/losses if things subsequently
go wrong between the parties and one of them finds
itself unexpectedly disadvantaged
General boilerplate clauses can be useful, however they
cannot be used beyond what was intended when the
agreement was signed.

In loan and security agreements, boilerplate provisions
are included giving the lender very wide powers to
require additional security or amendments to the
documentation. The agreements often contain broad
powers of attorney in favour of the lender to give effect
to these powers. Lenders who seek to rely on these
provisions should be cautious as it could extend their
security or amend other terms of the agreement
significantly beyond what was intended when the
agreement was entered into.
Pvr Pictures Ltd
vs Studio 18
Facts
 PVR & Studio 18 entered into a Distribution Term Sheet
Agreement (TSA) in respect of five movies- Ghajani,
Kidnap, Golmaal Returns, Dil Kabaddi and Shortkut
providing that PVR should be the exclusive licensee for
distribution of these films in east Punjab

Later, Parties entered into separate License Agreements
for all films except Shortkut. These Agreement were
different from TSA in respect that “Entire agreement”
clause was present
Contd.
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Parties had disputes on the appointment of PVR as
exclusive distributor for Shortkut in the same territory.
PVR sued Studio18 for specific performance under TSA
for Shortkut and also sort injunctions restraining Studio
18 for exhibiting and distributing Shortkut
Studio 18 countered by stating that TSA was a mere
Memorandum of
Understanding and not a formal
agreement. It was only a desire to enter into a
contractual relationship and does not evidence a binding
contract.
The matter went to Delhi High Court and High Court
notified the instances of following facts as under

TSA refer to five movies. In respect of four movies
parties enter into four separate license agreement in
which right and obligations of parties where properly
given.
Each of these four agreements contained termination and
arbitration clauses. It was also mentioned that previous
agreements and documents between the parties did not
have any effect and that the license agreement contained
the full and complete details constituting the contract
between the parties. The considerations and territories
for two of such movies were differences from TSA.

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Further, no amount was paid by PVR in respect of Shortkut.
Court further said that though PVR strongly relies on the
circumstances that four movies were released, thereby
implying that the parties had substantially fulfilled their
mutual bargain, what cannot be lost sight of, is the
circumstances that each instances of parties had entered
into separate agreements.
All the above circumstances, in the opinion of the court,
clearly disclose that the parties did not contemplate that
with execution of the TSA, a binding contract and
license, contemplated under the Copyright Act, came into
existence.

Although the court’s decision in this regard
would not have been altered if the “Entire
Agreement” clause was not present in the
License Agreements but its existence was
certainly a deciding factor

Though
the
Boilerplate
Clauses
are
indispensable part of any Agreement however,
the same should be inserted while looking into
each and every aspect of specific Agreement.