Boilerplate clauses in English law governed contracts: common pitfalls and how to avoid them – Part 3

In the final part of our three part series, we finish our exploration of key boilerplate clauses, their common pitfalls and how to develop best practices to avoid them (numbering continues from parts one and two)

7. Notices

Notice provisions specify how formal communications under the contract must be delivered, to whom, and at what addresses. Compliance with notice requirements can be critical for exercising contractual rights (e.g., termination, renewal options, dispute escalation).

Common pitfalls

• Outdated addresses: Parties frequently fail to update registered office addresses, key personnel contacts, or email addresses, leading to notices going astray and potentially invalid service.
• Email insufficiently detailed: Notice clauses that permit email but fail to specify required email addresses, subject line requirements, or confirmation mechanisms create uncertainty about valid service.
• Deemed service provisions: Clauses specifying when notices are deemed received (e.g., on posting, on delivery, on next business day) can have significant consequences, particularly for time-sensitive notices. Ambiguous deemed service provisions create disputes.
• Conflict with substantive provisions: Specific notice provisions elsewhere in the contract (e.g., for particular types of claim or termination) may conflict with general notice provisions, creating uncertainty about which applies.
• Inadequate address for service vs operational contacts: Contracts may fail to distinguish between formal legal notices and routine operational communications, leading to inefficiency or confusion.

… and how to avoid them

• Specify full details for service of notices: physical addresses, email addresses (with identified recipients or departments), and any requirements for marked attention.
• Include clear deemed service provisions that account for different delivery methods (hand delivery, post, courier, email) and time zones if parties are in different jurisdictions.
• Establish a mechanism for updating notice details (e.g., by written notice to the other party) and maintain internal systems to track and update contact information.
• Address email notices specifically: require read receipts, specify acceptable email domains, or require confirmation of receipt.
• Consider whether certain critical notices (e.g., termination, default) should require additional formalities such as registered post or multiple methods of service.
• Distinguish between formal legal notices and operational communications if appropriate.

8. Governing Law and Jurisdiction

Governing law clauses specify which legal system's substantive law governs the contract's interpretation and validity. Jurisdiction clauses determine which courts (or arbitral tribunals) have authority to resolve disputes. These provisions provide certainty and avoid protracted disputes about applicable law and forum.

Common pitfalls

• Conflating governing law and jurisdiction: Parties sometimes fail to distinguish between choice of law and choice of forum, or draft inconsistent provisions (e.g., English law with exclusive French jurisdiction).
• Non-exclusive vs exclusive jurisdiction: Clauses providing for non-exclusive jurisdiction allow either party to sue elsewhere, which may not align with commercial intentions. Ambiguous wording creates uncertainty about whether jurisdiction is exclusive.
• Failure to address multi-tier dispute resolution: Contracts incorporating mediation or expert determination requirements before litigation may fail to specify how these interact with jurisdiction clauses, or whether courts may order stays pending compliance with pre-litigation steps.
• Asymmetric jurisdiction clauses: Clauses giving one party broader forum options than the other (common in finance documentation) may be challenged as unfair in certain contexts and require careful drafting.

… and how to avoid them

• Separately address governing law and jurisdiction, ensuring they are consistent and reflect the commercial bargain.
• Specify exclusive jurisdiction clearly if that is the intention, using language such as "the courts of England and Wales shall have exclusive jurisdiction."
• If incorporating multi-tier dispute resolution, clearly set out the sequence of steps, any time limits, and the relationship with court proceedings or arbitration.
• For asymmetric jurisdiction clauses, ensure compliance with applicable fairness requirements and clearly document the commercial rationale.
• Include process agent language if the parties are outside the jurisdiction.

9. Counterparts and Execution Formalities

Counterparts clauses permit the contract to be executed in multiple identical copies, each signed by one or more parties, with all counterparts together constituting a single agreement. This facilitates execution where parties are in different locations. Execution formalities provisions address signature requirements, delivery methods, and electronic execution.

Common pitfalls

• Inadequate electronic execution provisions: Traditional counterparts clauses may not address electronic signatures, PDF execution, or email delivery, creating uncertainty about whether electronic execution is valid.
• Deeds vs simple contracts: Execution formalities differ significantly depending on whether the contract is a deed or a simple contract. Counterparts clauses must align with the chosen execution method.
• Delivery and escrow issues: Contracts may fail to specify when executed counterparts become binding—on execution, on exchange, or on satisfaction of conditions. Escrow arrangements require express documentation.
• Remote witnessing: For deeds or documents requiring witnessing, the validity of remote witnessing (e.g., via video link) has evolved during and post-pandemic, requiring updated provisions.

… and how to avoid them

• Include express counterparts provisions confirming that execution in counterparts is permitted and that all counterparts together constitute one instrument.
• Address electronic execution specifically: confirm that electronic signatures are acceptable, specify permitted signature methods (e.g., typed names, scanned signatures, advanced electronic signatures), and address PDF or email delivery.
• Distinguish clearly between deeds and simple contracts and ensure execution formalities align with the required form.
• Specify when the contract becomes binding (on execution of last counterpart, on exchange, on delivery, etc.).
• For deeds or witnessed documents, clarify witnessing requirements and whether remote witnessing is acceptable.
• Consider including dating provisions to address execution on different dates.

Conclusion

All boilerplate needs to be reviewed but not all boilerplate needs negotiating. Prioritise careful review and negotiation focus on:

• High-impact provisions: Governing law, jurisdiction/dispute resolution, assignment and entire agreement provisions often have the greatest commercial and legal impact.
• Context-specific provisions: Identify which boilerplate matters most for the particular transaction. For example, third-party rights may be critical multi-party projects and notice provisions are crucial for time-sensitive options or break rights.
• Asymmetric risk: Focus on provisions that allocate risk asymmetrically or where standard wording favours the other party.

Effective boilerplate drafting requires:

• deliberate consideration of each provision's purpose and effect in the specific contractual context;
• awareness of evolving case law, statutory constraints and commercial practice;
• internal consistency and alignment with substantive terms;
• regular updating to reflect legal and technological developments; and
• appropriate allocation of negotiation time and resources.

Fun fact as a prize for reading to the end (!): the term ‘boilerplate’ derives from the days before computers when small newspapers around the U.S. relied heavily on feature stories, editorials, and other printed material supplied by large publishing syndicates. The syndicates delivered that copy on metal plates with the type already in place so the local papers wouldn't have to set it. Printers dubbed those syndicated plates "boiler plates" because of their resemblance to the plating used in making steam boilers and, ultimately, ‘boilerplate’ came to refer to the printed material on the plates as well as to the plates themselves.

If you have any queries regarding this topic, please don’t hesitate to contact me at hannah.moran-ellis@twobirds.com.