The Contracting Compass initiative provides insight on English Law issues relevant to Oil & Gas contracts and comprises a series of seminars each accompanied by a dedicated White Paper.
At the latest edition of the Contracting Compass seminar series, the Brodies team sought to shine the spotlight on boilerplate clauses by providing an overview of current law governing their interpretation and practical guidance in respect of their drafting.
When it comes to the drafting of commercial contracts, boilerplate clauses are, admittedly, not the most interesting of topics. However, despite their lacklustre appeal, boilerplate clauses have been the source of conflict in a number of recent cases proving that an overlooked boilerplate clause can cause significant repercussions later on in a contract's lifecycle.
Through analysis and evaluation of relevant case law, the White Paper illustrates the interaction between four of the most frequently used boilerplate clauses and the law. In addition, the White Paper provides best practice drafting tips to avoid a dispute.
Entire Agreement
Part 1 sets out the importance of this clause in terms of (i) delineating the "four walls of the contract" and (ii) understanding the limitations of defining the entire agreement, such as implied terms, misrepresentation, mistake and estoppel.
Drafting Tips:Explicitly exclude limitations to an entire agreement clause through careful and precise drafting.
No Oral Modification ("NOM")
Part 2 focuses on the recent Supreme Court decision in Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24, by analysing the legal effectiveness of NOM clauses and the balance between this and the principle of freedom of contract.
Drafting Tips:Provide clarity on contract modification by considering whether "amendments in writing" include email and by including the job titles of "authorised representatives" rather than referring to individuals' names.
Waiver
Part 3 considers the limited case law authority available in respect of waiver clauses and highlights the importance of post-breach conduct by an innocent party, concluding that cases in relation to waiver clauses will be tested on their own merits and on the strength of the clause.
Drafting Tips:Ensure that waiver clauses include clear drafting requiring the positive action of a party (preferably in writing) to grant a waiver. Clearly express that a party's failure to enforce does not constitute a waiver.
Severability
Part 4 explores the three stage test which must be met prior to a contractual provision being severed (including the "blue pencil test") and considers the strict application of this test by the courts.
Drafting Tips:Triggers for severability should be clear and limited to: invalidity, illegality and unenforceability. Keep subsequent outcomes of severance specific and limited to the retention of the remainder of the agreement as a whole.
For more information and drafting tips on boilerplate clauses, download the White Paper here. If you have any questions relating to this White Paper, please do not hesitate to contact Greg May or Ken MacDonald.
Last week marked the 10th seminar in the Contracting Compass series. All of the White Papers which accompanied past Contracting Compass seminars can be accessed here. The next seminar in the Contracting Compass series will be held in Spring 2020.
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