Miscellaneous Contract Provisions: The Part You’re Not Reading

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Let’s face it. To anyone who is not a contract lawyer, contracts are boring. This fact, coupled with the sheer volume of contracts individuals and businesses see regularly, oftentimes makes it difficult to read and understand each and every provision of every contract. The “miscellaneous provisions,” typically found at the very end of a contract, are usually the first to go for those who do not have time to thoroughly review an entire agreement. Yet, these provisions, although often boilerplate, can have significant implications. The following is a summary of a few such provisions:

Entire Agreement – This clause, known as the “merger clause,” typically states that the particular document being executed constitutes the entire agreement of the parties and supersedes any and all other agreements. This means that any previous agreements the parties may have had, oral or written, were purportedly “merged” into the one document. Effectively, this means that if the parties had any other agreements (e.g. as to conditions, obligations, customary business practices, etc.) as part of the same transaction, they may not be enforceable if they were not included in the present document. Before signing a contract with a merger clause, it is thus important to make sure all the terms you intended and expected, including terms relating to customary practices or other modes of doing business among the parties, are included in the document.

Severability – The severability clause provides that a court may remove any provisions that turn out to be unenforceable by law, as an alternative to the possibility that the court may hold the entire contract to be unenforceable. This clause is typically desirable, as striking down the entire contract can subject the transaction to the unknown—rules of common law, terms other written or oral agreements, etc. However, it is important to understand that this clause effectively allows the court to change your agreement. Many provisions in agreements depend on others, so the removal of one has the potential to change the deal entirely.

Governing Law/Forum Selection – This clause sets forth which jurisdiction’s law will govern the interpretation of the contract. The forum selection clause states where a party can bring a claim under the contract. When the contracting parties are located or incorporated in different states (or countries), or when the transaction itself crosses jurisdictional lines, this clause should be reviewed and negotiated to ensure the selected law and forum is appropriate and agreeable.

There are many other boilerplate “miscellaneous” provisions that we regularly see in contracts. Ultimately, the most important point is that each provision, boilerplate or otherwise, should be analyzed by you and competent counsel to ensure that its terms are appropriate in light of the particular transaction.

Topics:  Boilerplate Language, Contract Drafting, Contract Formation, Contract Interpretation

Published In: Civil Procedure Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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