2nd Jun 2017

Contracts

“Boilerplate” provisions refer to template provisions or “one-size-fits-all” clauses usually found at the end of most contracts. Because they are so-common, these provisions are often taken for granted especially by lawyers. To the perceptive eye however, boilerplate provisions should be considered as gems in a contract because they complete not only the aesthetic value, but more importantly the legal dimension and efficacy of a contract.

Typical boilerplate provisions are clauses on force majeure, assignments, governing law, arbitration, and the like. They should be incorporated in your contracts sparingly, and with the caveat that it is always best to consult a legal professional for advice.

Force Majeure – This clause essentially means that if any “uncontrollable” circumstance causes a party to violate or breach the contract, such violation shall not be considered as breach of contract.

Representations and warranties. It goes something like “The parties acknowledge that this Agreement expresses their entire understanding and agreement, and that there have been no warranties, representations….” This clause provides that any promises or agreements not contained in the contract are deemed to have been disregarded and only those contained in the contract are considered as binding.

Separability Clause. This clause states that if a portion of the agreement is void, only such portion is invalid and not the entire contract. This is actually a surplusage in Philippine law because the rule on separability of provisions applies, with or without the boilerplate. However, it is inserted in most contracts as a matter of custom, or perhaps “just to be sure.”

Counterparts. This is especially helpful where both parties come from different countries. The contracting parties no longer need to be at one place to sign the contract, because through this clause, a signature of one party in a signed faxed copy is also deemed an original and both the faxed and original copies are constituted as the same document.

Warranties. This clause goes something like “If either party is a corporation, each person… warrants that such party is duly formed… that each person…is duly authorized to execute, acknowledge and deliver the Agreement to the other party.” Make sure you have this clause, especially when dealing with corporations. This will give an additional measure of protection that the other party you are signing with is actually an authorized signatory.

Venue and Governing Law. The governing law clause is essential only where the contract will involve parties from various countries. The venue clause, however, is important because it determines where a suit arising from the contract will be filed. It is suggested that the venue clause be designated to the place of office of your lawyer, as proximity to the venue of the case always lessens legal costs and expenses.

Transferability. Since some contracts involve personal obligations which cannot be performed by another person, the existence of a transferability clause in a contract allows successors and those who “step in the shoes” of the other party to carry out the contractual obligations.

Nicolas & De Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 4706126, +632 4706130, +632 4016392 or e-mail us at info@ndvlaw.com .

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