When negotiating a commercial contract, parties naturally focus on the headline terms, such as price, scope of services, delivery obligations, and liability caps. Tucked away at the back of most agreements, however, is a set of provisions often labelled boilerplate clauses. These clauses are frequently treated as standard, low-risk or even ignored altogether.

This approach can be costly to businesses. Boilerplate clauses are legally binding and, under the laws of England and Wales, can have significant commercial and legal consequences. In some cases, they determine how disputes are resolved, whether rights can be enforced and even whether a party can exit the contract at all.

This article highlights some of the most common boilerplate clauses and the hidden risks they may pose if not carefully reviewed.

What Are Boilerplate Clause?

Boilerplate clauses are provisions that appear routinely in commercial contracts, often in similar wording across different agreements. Common examples include:

· Governing law and jurisdiction

· Entire agreement

· Variation and waiver

· Assignment and novation

· Force majeure

· Severance

· Notices

· Confidentiality

· Third party rights

Although standard in form, these clauses are not neutral in effect. Their operation depends on precise drafting and the wider contractual and commercial context.

Governing Law and Jurisdiction

One of the most critical boilerplate clauses determines which law governs the contract and which courts have jurisdiction over disputes.

Agreeing to a foreign governing law or overseas courts can substantially increase the cost, complexity, and uncertainty of enforcement. Even where English and Welsh law is chosen, agreeing to non-exclusive jurisdiction or arbitration without understanding the implications can limit a party’s ability to pursue urgent remedies or consolidate disputes.

A poorly considered jurisdiction clause may result in parallel proceedings, unexpected procedural rules or difficulties enforcing judgments.

Variation and Waiver

Clauses stating that variations must be in writing and signed by both parties are common.

The risk arises where parties operate informally in practice. If commercial teams regularly agree changes verbally or by email without formal documentation, those changes may not be legally binding. Similarly, waiver clauses may prevent a party from relying on past forbearance, even where it has consistently overlooked breaches.

This can lead to disputes where one party believes the contract has evolved, while the other insists on strict contractual rights.

Assignment and Novation

Restrictions on assignment or novation are often overlooked but can have significant implications for corporate transactions, restructurings or group arrangements.

A clause prohibiting assignment without consent may prevent a party from transferring contractual rights as part of a sale, refinancing or internal reorganisation.

Where flexibility is required, boilerplate assignment provisions should be tailored to reflect the commercial reality of the relationship.

Force Majeure

Force majeure clauses excuse performance where events beyond a party’s control occur. English and Welsh law does not recognise force majeure automatically, it exists only if expressly drafted into the contract.

Risks arise where the clause is either too narrow or too broad. A narrow clause may not cover events such as pandemics, supply chain disruption or regulatory changes. Conversely, an overly broad clause may allow a counterparty to suspend performance in circumstances that should arguably fall within ordinary commercial risk.

Clear drafting is essential to ensure the clause operates as intended.

Notices Clauses

Notices clauses set out how and when formal communications must be served. These provisions are often highly technical, specifying delivery methods, addresses and deemed receipt times.

Failure to comply strictly with a notices clause can invalidate critical communications, including termination notices, break notices or claims for breach. Courts typically require close adherence to contractual notice provisions, even where the recipient has actual knowledge of the notice.

A minor technical error can therefore have disproportionate consequences.

Third Party Rights

Under the Contracts (Rights of Third Parties) Act 1999, third parties may have the right to enforce contractual terms if the contract allows it.

Many boilerplate clauses exclude third party rights as a matter of course. While often appropriate, such exclusions may unintentionally prevent group companies, funders or end users from enforcing rights that the parties assumed they would have.

This can create gaps in enforceability that only become apparent when a dispute arises.

Why Boilerplates Deserve Attention

Boilerplate clauses are not mere formalities. They allocate risk, define enforcement mechanisms and can significantly alter the balance of a commercial relationship.

Careful review and tailoring of boilerplate provisions is often as important as negotiating the commercial terms themselves. Standard wording may not reflect your business model, risk appetite or long-term objectives.

Berry Smith Bottom Line

The hidden risk in boilerplate clauses lies in their familiarity. Because they appear routine, they are often accepted without scrutiny, yet they can determine the outcome of disputes and the value of contractual rights.

Early review and thoughtful drafting can prevent costly surprises and provide greater certainty throughout the life of the agreement.

Please contact us if you would like more information about the issue raised in this article, or any other aspect of commercial law, speak to our experts at commercial@berrysmith.com or on 02920 345511 and ask for the commercial team.