structure of typical agreement (incl. boilerplate) Flashcards
structure of a commercial agreement
- FRONT COVER
- CONTENTS
- commencement, date, parties
- recital (desirable only)
- definitions and interpretation
- OPERATIVE PROVISIONS
- boilerplate clauses
- schedules
- testimonium and execution
OPERATIVE PROVISIONS
- terms defining the scope of agreement
- conditions precedent
- obligations of parties
- options or rights in favour of one party
- warranties and indemnities
FRONT COVER
- DESCRIPTION of the document indicating the transaction to which it relates
- DATE (modern form of dating 22 June 2017)
- names of the parties (if three or more parties, numbers used in brackets after name of the party)
- firm’s name and address (foot of front sheet)
contents page
each clause described by its heading in order it appears
- clause number
- page number
NOT an index listing subjects in alphabetical order
COMMENCEMENT DATE AND PARTIES
- DESCRIPTION (e.g. “This Partnership Agreement”, or “This Deed of Conveyance”))
- date, left blank till day last party signs it (modern form)
- full name and address (incl. postcode) and reg. number (NOT BUSINESS NAME, PUT REGISTERED NAME)
Recitals
introduced by “WHEREAS” or “BACKGROUND”
- not operative provisions
- but referred to by court if operative provisions are found to be ambiguous
- brief background/history of agreement
DEFINITIONS
first clause after COMMENCEMENT, DATE, AND PARTIES and RECITALS
defined so:
- particular concept can be covered by one or two words
- word can be given wider/narrower meaning than normal
NO OPERATIVE PROVISIONS IN DEFINITIONS
HEADINGS AND INTERPRETATION
This clause is often included in definitions
- determines interpretation of the document
states:
- headings in agreement are for convenience
- do not affect construction of agreement
- singular will include plural and vice versa unless context requires otherwise
- any gender includes any other gender
conditions precedent - what are they
must be met before agreement can come into force
E.g. novation of key contract, obtaining government license, receipt of important tax clearance
COMPLETION ONLY TAKES PLACE ONCE CONDITIONS PRECEDENT FULFILLED
conditions precedent - how to draft them
- IDENTIFY CONDITION CLEARLY (no scope for doubt as to whether satisfied)
- IDENTIFY WHICH OBLIGATIONS ARE CONDITIONAL (likely some provisions come into force even if condition not satisfied - e.g. confidentiality + interpretation clauses like definitions and governing law)
- WHAT NEEDS TO BE DONE TO FULFIL CONDITION - is this IN THE PARTIES CONTROL? (if partly in control of 3P and partly one party, consider if best to put that party under duty to use ‘reasonable’ or ‘best’ endeavours to ensure fulfilment
- INCLUDE LONG STOP DATE WHEN CONDITION MUST BE FULFILLED (and what happens if not - termination and sue for damages?
warranties and indemnities
way in which risks involved in commercial contracts are allocated and liability of parties defined
- define legal duties
- supplement/clarify any implied terms
Ability to limit/exclude liability under contract may be governed by statute (e.g. UCTA 1977, Misrep Act 1967)
warranty
binding statement of fact made by 1 party to the other
- used where 1 party enters agreement on basis of certain assumptions about the other
- used to define party’s obligations (e.g. if X has to deliver goods, X gives warranties as to quality)
indemnities
contractual obligation where 1 party agrees to keep another protected from a specific loss
- liability under an indemnity arises because parties stipulate 1 shall save another from loss (NOT because of breach)
- general principles of liability do not apply with indemnities (e.g. remoteness, mitigation)
terms defining scope
set out scope of party’s obligations set out elsewhere in obligation
e.g. term clause - defines duration of obligations under agreement
boilerplate clauses
general routine clauses
- deal with how contract operates
- regulates, controls, modifies obligations of all the parties
- careful thought of use of boilerplate in particular circumstance
entire agreement clause - what is in it
- States contract is the entire and only agreement
- Says that each party has not relied on and will have no remedy re: any statement, rep, warranty, or undertaking, other than what is expressly set out in agreement
- only remedy is breach of contract under terms of agreement
- nothing in clause limits/excludes liability for fraud
entire agreement clause - purpose
prevent party relying upon it from being liable for any statements/representations except as expressly set out in the contract
- commercial certainty (all obligations recorded in identifiable set of contractual documents)
- allows parties to accurately access risk (excluding oral assurances)
- allows parties to calculate a fair price more accurately
- prevents 1 party arguing that other terms of contract are elsewhere
governing law and jurisdiction clause - what is in it
includes:
ONE - law applicable
TWO - jurisdiction where disputes should be heard
THREE - whether courts’ jurisdiction is exclusive or non-exclusive
FOUR - covers “any claim, dispute, or difference arising out of or in connection with this Agreement”
(doesn’t have to be the same country)
good even if no international element
notice clauses - what is it
provides for
- where notice is to be served
- method of service
- time when notice is deemed served
- usually req. to be in writing
