Boilerplate and Party Intent
34 Pages Posted: 14 Nov 2019 Last revised: 11 Dec 2019
Date Written: December 11, 2019
It is commonly recognized that parties often do not read or understand contract boilerplate they agree to, and that such parties might not intend all the terms in it. Less often noticed are decisions that favor boilerplate over evidence of the parties’ contrary intent for the very reason that it is boilerplate. This article discusses that phenomenon. It identifies decisions in which courts favor boilerplate terms over other evidence the parties’ intent because it is boilerplate, discusses the rules that explain those outcomes, and examines the reasons behind the rules.
A contractual writing, whether individually negotiated and drafted or boilerplate, often displaces other evidence of the parties’ agreement. Plain meaning rules, the parol evidence rule, and the use of formalities can all operate to limit extrinsic evidence of the parties’ intent. But each rule also has special application to boilerplate. Plain meaning rules can serve to generate uniform construction of standard terms or adhesive contracts across multiple transactions. Some authorities suggest that standard terms and adhesive contracts are presumptively integrated, avoiding the standard inquiry into the parties intent to integrate under the parol evidence rule. And the judicial construction of boilerplate language sometimes transforms it into something like a legal formality—words whose legal effect depends on their form rather than their meaning.
In addition to these special applications of general rules to boilerplate writings, boilerplate is sometimes subject to more specific rules that limit evidence of the parties’ contrary intent. When the law mandates that boilerplate language be included in a contractual writing, the government’s understanding of that language should, ceteris paribus, control, even if the parties understood it differently. In markets that benefit from uniform contract terms and where a large portion of market participants employ a standard form to achieve those benefits, courts should seek to construe forms uniformly, with limited regard for individual parties’ understandings of them. Courts have at their disposal a number of tools to achieve such uniform construction. Courts sometimes defer to the non-binding construction other courts have put on the same language. Depending on the circumstances, they might also restrict their interpretation to the standard form’s plain meaning, defer to the form author’s interpretation of it, defer to regulators’ interpretation of it, or deploy a stringent contra proferentem rule. Finally, section 211(2) of the Restatement (Second) of Contracts suggests that it is sometimes reasonable to construe adhesive contracts at the expense of non-drafting parties’ understandings of them, although the Restatement leaves it unclear just when that is. Although there is not much judicial support for section 211(2), courts certifying consumer class actions have recently begun citing the provision for the proposition that boilerplate terms in consumer contracts should be construed without considering evidence of individual consumers’ understandings of them.
Keywords: contracts, boilerplate, interpretation, insurance law, consumer contracts
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