Boilerplate Clauses in an Insurance Contract

Introduction:

Conditions that generally show up toward the finish of an agreement are BOILERPLATE CLAUSES. In some cases, they are alluded to as the “miscellaneous” provisos. Such term alludes to the generally normalized provisions in agreements, which are regularly concurred with next to zero arrangement and found towards the finish of an understanding. While maybe not generally so industrially delicate as different terms in an agreement and subsequently regularly ignored, they all things considered play out a significant and valuable reason in an agreement. Most standard provisions explain the connection between the contracting parties. For the most part, dependent upon legal limitations and lawlessness. By including standard conditions, the gatherings to an agreement can more readily characterize the connection between themselves, which gives conviction if terms in the agreement are at any point questioned.

Boiler Plate Clauses

The term boilerplate was coined in the 1890s when plate printing was prevalent. These are called so because of their resemblance to the thick, tough steel sheets used to build steam boilers. The term boilerplate refers to standardized text, copy, documents, methods, or procedures that may be used over again without making major changes to the original.[1]

Black’s Law Dictionary, “Fixed or standardized contractual language that the posing party views as relatively non-negotiable.”

Boilerplate clauses are generally the miscellaneous or the general clauses which are mentioned at the end of the agreement. These are the consequential provisions different from the transaction-specific provisions of the contract.

Boilerplate clauses appearing in commercial contracts are:

• Entire Agreement,
• Notice,
• Force Majeure
• No Waiver,
• No set-off
• No partnership or agency
• Reliance/no reliance
• The essence of time, etc

These clauses come into action when something goes wrong in a contract.

Importance

1. Boilerplate clauses are generally taken lightly or are overlooked because they are the miscellaneous provisions of a contract.
2. These are the operative part of an agreement.
3. They come into action when a legal dispute arises.
4. They are used to interpret the conditions of the agreement.
5.  Such clauses are important in a complex agreement possibility of dispute and the cost of that dispute is high.

Necessity

Boilerplate clauses are not at all a necessity for a contract but effective enforcement of a particular contract. Initially, these clauses seem unnecessary but they prove themselves to be quite helpful when any sort of legal dispute arises. E.g., if the notice clauses state that the notice has to be given in a particular manner only i.e., by post, then any other mode of communication like through email might be held to be invalid and all communications including termination of the contract may become invalid.  If such a notice clause was not included in the agreement, then the communication through email would have become valid. Hence, it is necessary to ascertain whether a particular clause is required or not.[2]

List of Boilerplate Clauses

1. Force Majeure Clauses
   An example of such a clause can be the COVID-19 pandemic where parties to the contract were unable to perform the contractual obligation. In such a situation the clause added can be returned as “no party shall be liable or responsible for any delay in performance under the agreement in the event such failure or delay is caused by a force majeure beyond the parties control.”
2. Entire Agreement Clauses
   Such type of clause makes an obligation on the parties to supersede the present agreement rather than creating a misunderstanding with any previous oral or written agreements which were made before the execution of the present contract.
3. Definitions and Interpretations Clauses
   This type of clause clarifies the meanings of the words used in an agreement or a contract. The basic conflict can arise between the term “days” and “business days” which can be clarified by the contracting parties according to their interpretation of these words in the agreement itself to avoid any kind of misinterpretation.
4. Governing Law and Jurisdiction
   This clause clarifies that by what provisions, law, statute, code or act a particular agreement shall be governed. It also clarifies the jurisdiction bear a particular suit if arises is to be settled.
5. Confidentiality Clauses
   Confidentiality clauses are included in any contract to maintain the secrecy of the terms shared between both parties. This clause maintains the promise that has been made and creates an obligation on both parties to keep a secret. Failure to comply with the confidentiality clause can lead to legal action for breach of trust.
6. Dispute Resolution Procedures
   Contracts also include provisions that clarify the procedure that either party has to follow in case of a dispute between them dispute resolution clauses shall specify the requirements and responsibilities of both parties in handling the dispute. Effective appropriate negotiation and resolution procedures should be written down.
7. Duration of The Contract
   These types of clauses are very important in an insurance contract as it specifies the period for which insurance has been made. As we all know insurance of a particular thing can be of a limited period and life too. Hence, it depends upon the duration mentioned in the contract made.
8. Exclusion Clauses
   This is also an important clause for an insurance contract. It clarifies a situation where a particular party will not be liable to the other in particular mentioned events in the agreement. This clause operates to exclude, restrict or qualify the rights of the parties.
9. Indemnity and Insurance Clauses
   To “indemnify” someone is to secure them against a particular loss, so an indemnity clause is a contractual commitment by one party to compensate the other party for certain potential losses under a contract. In other words, an indemnity clause is a commitment by one party to cover the liability of the other party – effectively shifting the consequences of a contract risk to a designated party.
10. Liquidated Damages Clauses
    Liquidated damages are fixed damages agreed to by parties to a contract that applies if a specified event occurs. This is similar to an exclusion of liability clause, but instead of limiting potential liability, they “fix a price” for compensation if a certain event occurs.

Conclusion

There is an assortment of standard statements to be remembered for arrangements relying upon their appropriateness and setting. Certain arrangements might require distinctive standard statements to be incorporated and such conditions should be drafted to suit the necessities of the gatherings and the nature of the understanding. In certain conditions, these provisions are complete and, in others, are basic and standard relying upon the intricacy of the understanding corresponding to the exchange.

Significantly, these standard conditions are investigated and drafted with accuracy and lucidity as such clearness, translation and guidelines could affect either of the two players. Every standard proviso has a reason and can be planned to accomplish diverse wanted results relying upon how it is drafted. Disregarding standard statements might cause negative and undesirable debates. It is subsequently fitting for such statements to be drafted or checked on by lawful experts to suit the usable terms of the arrangement and to more readily mirror the agreements of the understanding between the contracting parties.

References:

[1] James Chen, Boilerplate, INVESTOPEDIA, (February 02, 2021), https://www.investopedia.com/terms/b/boilerplate.asp(Last Visited- 28/10/2021)

[2] How Should You Customize or Draft Boilerplate Clauses in a Commercial Contract? (Even If You Take Them From Another Website Or Someone Else Document), iPleaders, (December 4, 2019), https://blog.ipleaders.in/draft-boilerplate-clauses-commercial/ (last visited 03/11/2021)