Academic journal article Law and Contemporary Problems

Boilerplate and Party Intent

Academic journal article Law and Contemporary Problems

Boilerplate and Party Intent

Article excerpt

INTRODUCTION

When courts are called on to determine the terms of a contract, they almost always begin by affirming that "[t]he primary goal in interpreting contracts is to determine and enforce the parties' intent.'" (1) But a contract's terms are not only a matter of the parties' intent. Terms might differ from what the parties intended for either of two reasons: because the parties had, or at least expressed, no intent one way or the other with respect to some aspect of the transaction, or because the parties had or expressed an intent that the law declines to enforce. Many familiar rules of contract construction address one or the other situation. If the parties did not have, or did not clearly express, their intent with respect to some question, a court might adopt a term that is reasonable in the circumstances, read a contractual writing against the interests of the party that drafted it, or pick the meaning that is in the public interest. (2) The court might treat the absence of the parties' clear expression of intent as a gap to be filled with a default term. (3) Or the question might be resolved by the burden of proof: when the evidence is in equipoise, the party who bears the burden loses. (4)

Other rules of contract construction impose or refuse to enforce terms despite evidence of the parties' contrary intent. Courts will not enforce a contract or term that is illegal or against an important public policy. (5) The law also includes a raft of mandatory terms. These range from the very general, such as the duty of good faith, "which inheres in all contracts and cannot be disclaimed," (6) to the very specific, such as minimum wage laws, anti-discrimination laws, the mandatory warranty of habitability, and the duties of corporate officers. Clear statement rules can prevent parties who do not know the magic words from getting the terms they intend. (7) And by excluding evidence of the parties' actual intent, formalist rules of construction like the plain meaning and parol evidence rules can sometimes bind parties to terms contrary to their intent. It might be that the primary goal in contract interpretation is to determine and enforce the parties' intent. But that is not the only goal in contract construction.

Contractual boilerplate is subject to all of the above rules, but also raises issues of its own. When applied to contractual writings, "boilerplate" is used in two distinct senses. Sometimes it refers to clauses that almost always appear in contractual writings, or contractual writings of a certain type, that are unlikely to be negotiated or even read by the principals, but that might be altered by the lawyers--for style or for substance. In negotiating a commercial lease, for example, the lawyers might or might not discuss and change the wording of an integration clause, a severability clause, a notice provision, or a no-waiver clause, treating those terms as mere boilerplate that need not be brought to the principals' attention and might be left untouched. Call this "soft boilerplate."

This Article focuses on the other sense of "boilerplate": language that is not open to negotiation or alteration. Such "hard boilerplate" corresponds to the original sense of the term: the words in some contractual writings are as fixed and unchanging as the thick steel plating on steam boilers. The most commonly-discussed type of hard boilerplate is the contract of adhesion: a written agreement drafted by one party and given to others on a take-it-or-leave-it basis. (8) Other types include contractual writings drafted by third parties, such as industry associations, that are expected to be used without modification, and clauses that are legally required in certain types of contracts, such as the consumer credit notice provisions that the Federal Trade Commission mandates in consumer contracts. (9) From this point forward, the reader should read "boilerplate" to mean hard boilerplate.

Boilerplate can give rise to discontinuities between the parties' intent and the legal terms they are bound to for either of the two reasons identified above: because the parties do not have, or have not expressed, an intent one way or another with respect to a term, or because one or another rule prevents the parties' intent from being effective. …

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