How to Understand a Legal Contract

Boilerplate sections of a document are often highly underrated. They are the ‘lawyer’s stuff’ at the front of the document that often gets scant attention.

That is unfortunate as when a problem arises, the answer is often found within these sections. Was the deal GST inclusive or exclusive? What about prior discussion and agreements, were they specifically excluded form the contract and replaced by the ‘entire agreement’ provision.

The documents written response to such fundamental questions could save your bacon one day.

It is standard practice to include a number of these general ‘interpretation’ provisions in any legal document.

They are often placed at the front of the document and boilerplate provisions that address standard legal terms are usually included at the back of the contract.

The core commercial terms are set out in the body of the contract.

These provisions are general in nature and determine how the document should be interpreted.

Some of these common boilerplate provisions are:

• a reference to a statute or other law includes its regulations and all amendments to these laws;
• a reference to this document includes any variation or replacement of it;
• a reference to a clause includes a reference to a sub-clause;
• any reference to confidential information includes any parts of the confidential information;
• the word “person” includes a firm, corporation or other entity;
• a reference to a person or a party includes a reference to the person or party’s executors, administrators or representatives;
• a reference to a group of persons is a reference to any two of them jointly and to each of them individually;
• a reference to a party includes a reference to its directors, employees and agents;
• singular words include the plural;
• a reference to dollars or $ is a reference to a specified currency;
• a reference to any monetary amount means an amount exclusive of GST or VAT. (N.B. Only if you are the seller. Make it inclusive if you are the buyer);
• all headings in the document have been inserted for ease of reference only and are not intended to affect meaning or interpretation.
• a provision must not be construed against a party only because the party prepared it.
• the word “including” is not a word of limitation.