by Richard Stim

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lthough you should usually hire lawyers when dealing with contract issues, it is important to grasp an understanding of contract language and the fine print.

Lawyers use the term “boilerplate” to refer to a group of provisions, usually found at the end of an agreement. These universal, rarely modified clauses in contracts have little in common except for the following: They don’t fit anywhere else in the contract, they’re usually not critical to the actual transaction and they tend to cause problems only when they’re absent.

Getting familiar with these boilerplates could save you from having to pay $250 an hour for a lecture from your lawyer on the same topic.

This doesn’t mean that you must sue in California, only that wherever you resolve a dispute arising from the agreement, the judge or arbitrator will apply California law.

For most basic contract and corporate matters, state laws are fairly similar and the differences between states’ laws are usually not great enough to make this a major issue.

A “jurisdiction” provision can specify where lawsuits between the contracting parties will occur. Jurisdiction provisions — sometimes called forum-selection clauses — require that the parties consent in advance to the jurisdiction of a specific court, and that the parties waive the right to complain about jurisdiction later or bring a lawsuit anywhere else. (Forum selection provisions only affect lawsuits arising out of or relating to the contract.)

Two states — Idaho and Montana — refuse to honor these provisions. In other states, courts have required some contacts with the state beyond the existence of the contract provision. And in many state and federal lawsuits, there are provisions that bar the use of forum-selection clauses for specific types of claims.

A governing law provision tells the parties which state’s laws will be used to make a decision in the dispute. A forum-selection provision specifies where a case can be filed.
“Each party consents to the exclusive jurisdiction and venue of the federal and state courts located in.”

Back in the day of Pacta sunt servada (Latin for “Contracts must be honored”), if you were contracted to do something , you were still obligated regardless of circumstances. In modern times, courts have developed a principle known as “impracticality” that excuses or delays performance if it’s rendered impractical by a supervening event — for example, a fire destroys your studio.

To guarantee that you aren’t obligated or in breach after a disaster strikes, most contracts include a “force majeure” boilerplate provision that sets out impracticality standards. Often, a force majeure provision will detail the potential disasters — volcanic eruptions, typhoons, civil disturbance, terrorist act, act of God, etc. In other cases, the provision is more general and usually excuses you from events beyond your control and not the fault of the parties.

For more information on contract issues check online at (contract.martinertl.ca), Findlaw (findlaw.com) or Nolo (www.nolo.com).

The information in this article was adapted from an article by Richard Stim, which originally appeared in the July 2004 issue of The Crafts Report.

Sometimes referred to as the “integration” provision, this clause establishes that the agreement is the final version and that any further modification must be in writing. This boilerplate prevents parties from later claiming, “But you told me such and such.”
“This is the entire agreement between the parties. It replaces and supersedes any and all oral agreements between the parties, etc.”

Let’s say someone is supposed to pay you on the first of every month. For three months, you accept the payment on the 20th. By including a waiver provision, the debtor can’t claim that you set a precedent and he’s always permitted to pay you on the 20th. A waiver provision saves you from having to enforce the agreement every time.
“The failure to exercise any right provided in this agreement shall not be a waiver of prior or subsequent rights.”

It used to be that one legal error in a contract could torpedo the whole transaction, until “severability.” Also know as “invalidity,” this permits a court to sever a portion of the agreement that’s no good while keeping the rest of the agreement intact.
“If a court finds any provision of this agreement invalid or unenforceable, the remainder of this agreement will be interpreted so as best to carry out the parties’ intent.”

This provision (also known as a “choice of law”) determines which state’s laws should be chosen in the event of a dispute.
“This agreement will be governed by the laws of the state of California.”