Boiler-Plate Contracts: Too Hot to Handle?

Meetings & Conventions: Planner's Portfolio February 1998
February 1998 PLANNER'S PORTFOLIO:

The Law & the Planner

BY JONATHAN HOWE


Boiler-Plate Contracts: Too Hot to Handle?

The standard wording planners tend to ignore may be crucial if the deal goes sour

Generally, most meeting planners don't really care about what lawyers call "boiler plate" provisions of contracts. That is, until the boiler plate burns them.

Often, lawyers and clients fall into a false sense of security based on the words "boiler plate," which refer to detailed standard wording in a contract. After all, if it's standard, it shouldn't be problematic, right? Absolutely wrong.

Consider a few boiler-plate provisions that could haunt a planner or supplier.

Counterparts: A typical provision says the agreement may be executed in any number of "counterparts" and by different parties in "separate counterparts." In other words, more than one piece of paper is related to the deal, and more than one person signs those papers. The provision goes on to say that "each counterpart, when so executed, shall be deemed to be an original and all of which together shall constitute one and the same agreement." Translation: All of those pieces are part of the same agreement.

A meeting planner is likely to see this as no cause for concern and sign off on it. But consider this: According to basic contract law, the party who makes the offer controls the method by which it can be accepted. He is likely to require signatures on all contract documents. When we deal with "counterparts," the parties agree there may be several documents out there. And if any one of those pieces of paper is not signed, or if changes exist in one of the pieces but not the others, the contract may be considered invalid.

Several court decisions stress the importance of playing the contract game according to the legal rules. In one case, signatures were to appear on numerous pages. On one page that three people were expected to sign off on, only one or two signatures appeared. The result: no contract.

Notices: Generally, the boiler plate will state that "notices" are to be given by "certified" or "registered" mail. If the planner calls or sends a fax to make changes in a room block, for example, these "notices" were not communicated in accordance with the contract and legally do not have to be honored.

Merger of Terms: Most contracts say something to the effect that all terms and conditions previously agreed to are part of the written contract, and if not so stated, they are not a part of the contract. Therefore, if it's not in the document, it's not a legal obligation.

Choice of Law: This may specifically limit what state or country's law will be used to interpret the contract, and in almost every case it will be the law of the location of the meeting. For the most part this will not be a problem -- unless you are offshore. (For offshore meetings, attempt to go with "the laws of the United States" or your state in particular.)

MORE THAN SEMANTICS

These points may seem trivial now, but when someone wants to make or unmake a contract, they can be crucial. Always read the boiler-plate provisions -- and be sure you thoroughly understand them.

Just for a moment suppose that you have exchanged documents with the hope of entering into a contract with your supplier. Your lawyer has suggested that language be included in the document to the effect that it can be executed in counterparts and accepted by a fax response. This can happen, but the lawyer should have made a distinction between the formation of a contract and evidence of the contract itself. You can accept by way of a fax. However, if a dispute arises, the courts look for the "best evidence." A fax is nothing more than a copy, and if you don't have an original, can you prove the existence of the contract?

In one case, the parties had signed, at separate locations, a copy of the proposed agreement, and each left the counterpart with his or her own lawyer. Signed copies, nonetheless, were never exchanged.

When one party wanted out of the deal, the court upheld the contract, ruling that the two undelivered copies formed one binding contract. Why? The document included a boiler-plate phrase that counterparts would be enforceable, and it did not specify that the contract had to be delivered.

Clearly, boiler-plate language, even the most simple provisions that so many lawyers take for granted, deserves close attention. In the end, you're the one who will take the heat for signing that page without a second glance.

Jonathan T. Howe, Esq., is a senior partner in the Chicago and Washington, D.C., law firm of Howe & Hutton, Ltd., which specializes in meetings, travel and hospitality law.