[Updated 11 September 2024: I’ve been fiddling with what article headings to use and moving sections around. I expect that will continue for a bit!]
You’re drafting a contract that’s big enough for you to group sections into articles, so the contract is easier to navigate. What do you call the boilerplate at the back? “Boilerplate” would be too cryptic (for many) and too casual. “Miscellaneous” would be a standard option. But that seems a cop-out—describing by not describing.
After ten minutes of thought, I propose an alternative taxonomy:
Let’s use “Resolving Disputes” (which I just stole from Mark Stansbury; see the comments to this LinkedIn post) for these sections (whichever appear, and using whatever section heading you use):
- Governing Law
- Equitable Remedies
- Jurisdiction
- Arbitration
- Recovering Expenses
- Time Limit
- Severability
And let’s use “Administration” for these sections:
- Notices
- Force Majeure
- No Transfer
- Independent Contractor
Instead of a more conventional heading, “Interpretation”, I’d like to experiment with “Constituents of the Contract” for this next group, to reflect that it goes beyond the words. But I don’t bother with “Counterparts”, “Interpretation” (usually), and “Headings”!
- Entire Agreement
- Amendment
- Counterparts
- Interpretation
- Headings
And here’s a new one—”Allocating Risk”:
- Indemnification
- Force Majeure
- Limitation of Liability
But a given contract might have only one provision that falls within the scope of “Allocating Risk”, or none. If “Indemnification” addresses claims between the parties, that would fit better in “Resolving Disputes”. Alternatively, “Indemnification” routinely looms large enough in transactions to give it its own article. And plenty of contracts don’t address force majeure. If “Allocating Risk” would otherwise feature only one provision, put the other one in an article by itself or in whatever other article is the best fit.
What do you think? And what other sections might you add to one or the other of those articles? Or do you have some other taxonomy in mind?
I like this kind of breakdown. In our firm’s operating agreement template, for example, we use Resolving Disputes, Exculpation and Indemnification, and Interpreting This Agreement.
The last one is perhaps a little broad, but includes subheadings for Interpreting This Agreement, Amending This Agreement, Confidentiality, and Giving Notice.
Maybe it should be Administering This Agreement?
In the modern way, I replied on LinkedIn!
I like the general idea you’re following here, though I have a few quibbles on details. First, the “Determining What Constitutes the Agreement” heading is a bit rambling; something like “Contituents of Agreement” would be punchier. Second, what you put under “Administration” includes things I wouldn’t describe that way. A force majeure clause isn’t administration, it’s a limitation of liability and ought to be either part of the section so named, or adjacent to it. Granted the typical FM clause has some administrative aspects, but considering the whole clause as administrative is burying the lede.
Hi Vance. “Constituents of the Contract” it is—at least until something better comes along. And point taken about “Force Majeure”. What do you think of how I’ve attempted to address that?
I have long ago abandoned “Miscellaneous” as too childish for a deal involving millions of dollars.
My current standard is “Additional Provisions,” which is generic enough to encompass everything we put in there with a tiny bit more polish than “Miscellaneous.”
That said, I think that whether someone adopts your three-section naming convention, we can all do better by thoughtfully grouping and ordering these sections accordingly. I would put dispute resolution first, then “Nature of this Agreement” (to save a few words), and then your administrative terms.
Hi Rick. Obviously, “Additional Provisions” just says “Here’s some more stuff!” Is that a problem? No, but I think we can do better by being more specific.
“Determining What Constitutes the Contract” is now, at least for the time being, “Constituents of the Contract”.
I am working on reordering a SaaS agreement to dispense with the “General” / “Miscellaneous” section. In my working draft, I am organizing those provisions under the following sections:
– Addressing Issues and Disputes:
This section describes how to resolve certain disputes between the parties, such as payment disputes, but it also includes concepts that would ordinarily be in “Non-Exhaustive Remedies”, “Governing Law”, and “Jurisdiction”.
– Handling Claims Brought by Nonparties
This section covers Indemnification.
– Navigating Relationships with Nonparties
– Assignment
– Subcontractors
– Third-Party Beneficiaries
– Third-Party Platforms
– Affiliates
– Communicating about the Agreement
– Billing Notices
– Legal Notices
– Form and Effectiveness of Notice
– Describing the Agreement
This section includes concepts what would ordinarily be in “Entire Agreement”, “Amendment”, “Headings”, “Interpretation”, and “Severability”.
I am still working on the wording, but this feels much more intuitive. I may also include Force Majeure in the LoL section, the rationale being that it’s a way of limiting liability (by excusing certain breaches).
I’ll throw my hat in the ring: General Provisions. It signals that the following provisions apply to the entire contract.
Are additional subgroupings necessary? Wouldn’t silently grouping similar provisions together be enough? You could even standardize the silent groupings so that boilerplate provisions appear in a similar order in most contracts.
What about a communication grouping? This might include both notices and confidentiality provisions.
And what about additional documents/further assurances? That’s a relatively common provision. I’m still thinking about where this provision might fit in terms of the currently proposed categories.