Commercial contracts are long and complex documents. Consequently while the body of the contract is often considered in detail, the ‘standard’ clauses that often adorn the end of a contract (those dealing with jurisdiction, whole contract etc.) are often overlooked. This can often be a fatal mistake.
What are these standard ‘boilerplate’ clauses?
These ‘standard’ clauses are known within legal circles as ‘boilerplate’ clauses and are vital protections that place the contract into context and assist with the legal interpretation. Contracts that do not include, or include badly drafted boilerplate clauses, are often the cause of much unnecessary litigation.
What could go wrong?
A classic example is where a contract with an international element does not include a jurisdiction clause. Should a dispute arise over the interpretation of this contract, then it will almost certainly lead to unnecessary and expensive satellite litigation (i.e. disagreements within a case, which leads to yet more cases in an attempt to resolve the main case) to determine the jurisdiction.
Luckily the law does have provision to determine the appropriate jurisdiction in such a circumstance. The common law test applied by the English Courts was to consider inferred intention and close connection (namely to which jurisdiction is the contract most closely connected?). This test has now largely been replaced by Rome I (593/2008/EC) and the Rome Convention (80/934/EC) dealing with contacts between parties within the European Union and international contracts respectively.
Nonetheless, English Courts have demonstrated that that they are still willing to apply the common law test where it can be demonstrated that another part of the same contract should be governed by English law. Aquavita International SA and another v Ashapura Minecham Ltd  EWHC 2806 (Comm) was such a case. Here the High Court decided that where a guarantee is given in respect of obligations under a main contract governed by English law, the court should follow the common law position and infer that the parties chose that the guarantee should be governed by the same laws.
Aquavita was a costly piece of satellite litigation and stands as testament to the risk of failing to include a full set of boilerplate clauses into a contract.
Are you in dispute over a commercial contract?
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