boilerplateIf you’ve ever had to pore over a contract when engaging in a business transaction, you’ve likely encountered some unfamiliar or unclear language. In all likelihood, this language was what’s called “boilerplate”—standardized legalese that communicates a common concept or provision in a concise manner.

Whether it’s included somewhere in the main body of the contract or grouped together at the end of the document (the “fine print” everyone is encouraged to read but rarely does), boilerplate language is a critical part of a contract. As such, it’s crucially important that you understand what these commonplace phrases actually mean before you sign on the dotted line.

Here’s a closer look at some of the most common provisions with which you will want to be familiar:

  • Arbitration clause: To eliminate the possibility of a lawsuit, many contracts will include a clause indicating that disputes must be settled through arbitration.
  • Attorney fees clause: To discourage frivolous lawsuits and protect against expensive litigation, contracts will frequently include the provision that the losing party pay the winning party’s legal fees.
  • Force majeure clause: This language refers to “acts of God,” such as natural disasters, which can delay or render an agreement impossible to fulfill. A force majeure clause allows the agreement to be temporarily suspended in such a situation.
  • Indemnity provision: An indemnity provision protects one party against costs arising from third-party complaints, disputes or litigation.
  • Integration clause: An integration clause is frequently included in contracts to indicate that the contract represents the final agreement between two parties. In other words, prior verbal agreements are overruled by the contract, and any changes to the agreement have to be in writing.
  • Statute of limitations clause: It is possible to shorten the statute of limitations for bringing suit related to the terms of a contract, although it’s important to note that states and territories may override this clause in certain situations.
  • Waiver and non-waiver: Waiver clauses allow parties to relinquish the right to sue in the event that a particular provision in the contract was breached. A non-waiver clause, meanwhile, protects a party in the event that he or she excused non-compliance with a provision of the contract by allowing for the option to enforce the terms at a later date.

Even though people sign contracts all the time without thoroughly reading them or understanding exactly what they are signing, that doesn’t mean you should—particularly if you’re signing a contract as part of a business transaction. An experienced business law attorney can explain any language in your contract that may be unclear to you, so be sure to consult a legal professional before you proceed.

BoltNagi is a respected and well-established business law firm serving clients throughout the U.S. Virgin Islands.