India: Status Check – Boilerplate Clauses

Last Updated: 7 March 2013

By Pratyush Khurana, an Associate with Vaish Associates, Advocates1

"Fixed or standardized contractual language that the proposing party views as relatively non-negotiable" is how the Black's Law Dictionary defines "boilerplate" (in addition to "ready-made or all-purpose language that will fit in variety of documents").

"Miscellaneous" or "General" clauses at the end of an agreement are often treated as boilerplate thereby inviting limited or no attention. The boilerplate clauses are generally perceived as non-substantive provisions and are diverse from other transaction specific clauses which form the essence of the agreement. Many of the boilerplate clauses in the commercial contracts often go without negotiations and modifications irrespective of the fact that a court ruling or any subsequent amendment in law has created doubts with respect to the enforceability or validity of said clauses or the clause may not at all be relevant in the context of the transaction. There are times when the drafting party inadvertently retains such boilerplate clauses in the first draft circulated to the counterparty even though some of these clauses may be adverse to their own interests.

"Its standard" is every lawyer's preferred explanation while negotiating an agreement. Another aspect for not negotiating or examining said clauses is based on the presumption that whenever one party attempts to review or revise or amend a boilerplate clause, the opposite party to the negotiation get skeptical that this might result into it losing something relevant. The contentious issue arises especially when a clause has been around for long and when so many of the earlier transactions have been concluded with the similarly worded clauses.

Some common boilerplate clauses generally appearing in commercial contracts are:

  • Entire Agreement;
  • Notice;
  • Force Majeure;
  • Severability;
  • Further Assurances;
  • No set-off or counterclaim;
  • Reliance or No reliance;
  • No waiver;
  • Governing Law and Jurisdiction.

It is said that why tinker, when the going is good; however, boilerplate clauses comes into play when things actually go wrong. The recent global credit crunch witnessed a paradigm shift in the perspective of lawyers with respect to the ways in which some of the above stated "boilerplate" provisions were worded and negotiated.

Earlier, certain clauses that were considered inconsequential to even discuss suddenly became essential when stakes were high. The importance and implications of the said standard clauses are briefly discussed hereunder:

Entire Agreement clause provides that the agreement in question together with all annexures, schedules, exhibits and attachments constitutes the entire agreement and understanding between the parties with regard to the subject matter, and supersedes any previous agreements, discussions and understanding between the parties to the agreement. The purpose of the said clause is to exclude liability for any pre-contractual statements exchanged between the parties which do not form part of the executed agreement. This enables the parties to provide certainty to the agreed terms and also limiting possible claims from dealings outside the agreement. However, it is important to ensure that all the terms of any previous agreements and understanding are captured accurately and completely in the agreements.

Notice clause provides the mechanism in which the notices and other communications are to be served and exchanged between the parties. Essentially, the Notice clause provides that all notices are to be in writing.

Reference and compliance to such Notice provisions is fundamental when making any communication with the other party or serving any form of Notice, as any error and defects can be fatal to the validity of the Notice.  It is quite possible that the address of parties may change specially in the case of long term contracts. Notwithstanding the presence of this clause, it is always advisable that the sender ensures that the notice is addressed to the current address of the party especially in the case of any contentious issues.

Force Majeure clause prevents the parties from any liability to perform contractual obligations when performance is not possible owing to an event or circumstance beyond the performing parties' reasonable control. The force majeure events mainly include an act of war, invasion, armed conflict, strikes or lockouts, flood, cyclone, lightning, earthquake, act of God etc. The exact scope, nature and application have to be specific and clear. A standard clause may not fit in all transactions.

Given the possible uses and misuses of force majeure clause, this clause should be discussed extensively in contract negotiations. The law does not define 'force majeure', therefore, to avoid any diverse interpretation the parties should detail out the events (basically events that are unforeseeable) which may prevent its performance and result into triggering the operation of this clause. Furthermore, it is also pertinent to understand that an affected party before triggering the said clause must have taken reasonable endeavours to mitigate the outcome of the event.

Severability clause provides that if any provision of the agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of prohibition or unenforceability but that shall not invalidate the remaining provisions of such agreement or affect such provision in any other jurisdiction. The basic objective of the said clause is to keep the validity and legality of the provisions of the agreement less interdependent on each other.

In other words, the provisions of the agreement shall remain intact or unaffected in the event any provision of the agreement becomes unenforceable or invalid or prohibited due to any changes brought in any applicable law by way of amendments or if the implications are determined otherwise by a judicial authority.

In the absence of a Severability clause, it is likely that if a single provision of the agreement is held invalid, there could be a case to argue that the entire agreement will also be rendered invalid, and therefore unenforceable. For example this apprehension loomed largely in respect to absence of Severability clause in "Share Purchase Agreement" when recently the Indian securities market regulator i.e. Securities Exchange Board of India adopted the view that put/call options and rights of first refusal are illegal and therefore not enforceable.

Further Assurances clause provides that each of the parties to the agreement shall at the demand or request of the other execute and deliver any and all additional information, papers, copies, documents and other assurances, and shall do any and all acts and things as reasonably necessary in connection with the performance of its obligations.

While including this clause in the agreement the parties believe that they will cooperate with each other and facilitate the smooth flow of the transaction; however, drafting the said clause in a broad manner could lead to unreasonable and recurring demand of documents. This may result into variety of administrative difficulties in case the parties to the agreement have unequal bargaining power.

Therefore, the said clause should be conditional upon the request being reasonable.

No set-off or counterclaim clause as generally used in the standard loan documents provides that borrower must make all its payments without setting-off any amount. The impact of such a clause is to basically prevent the borrower from raising a counterclaim; however, in the event of actual dispute it remains at the discretion of Court as to whether or not to decide the counterclaim of the borrower on merits before directing the borrower to make payment to the lender.

 The inclusion of this clause in the agreement is intended to protect the interest of the lending party in the event the borrower tries to set off amounts due to lending party against any amounts allegedly claimed by the borrower from the lending party.  In practice it is very common to see borrowers claiming set offs and counter claims against alleged damages for delays in disbursement and the consequent adverse effects on operations of the borrower.

Reliance or No reliance clause operates in their respective fields, depending on the circumstances and nature of the agreement.

In loan documents the 'Reliance' clause is included to specify that the reliance has been placed by the lending/ secured parties on the validity, effectiveness or genuineness of any documents or any statement, warranty or representation made by the borrower or its authorized representatives.

On the other hand, 'No reliance' clause is included in an agreement wherein the parties do not intend to bind each other for any advice rendered by one party to the other. The purpose is to generally provide that the parties have not made any pre-contractual promises or representations but, just in case they have, then neither party has relied on any such representation made by the other that is not reproduced in the agreement itself.

Legally speaking the intention of this clause is similar to that of Entire Agreement clause. The basic objective being that the parties agree not to rely on anything other than what is specifically stated in the agreement. This clause is found quite often in consortium lending documents where each lender indemnifies the other and confirms that it has not relied on the appraisal by any other co-lender or the consortium leader.

No waiverclause generally provides that no failure or delay in exercising a right will constitute a waiver of that right.

For example: In case of any material breach of the terms of the agreement the non-defaulting party is entitled to terminate the agreement, however in practice, it is not expected that the non-defaulting party shall immediately take steps for termination. Quite often, the non-defaulting party may want to grant some additional time beyond the contractual cure period to the defaulting party to remedy the situation. However, if the non-defaulting party does not take any action within reasonable period of time and continues to perform its obligations under the agreement then it may stand to lose its right. Hence, this clause needs to be drafted to provide that any subsequent performance shall not result into redundancy of the 'No waiver' clause.

Governing Law and Jurisdiction clause provides that the agreement shall be governed by, and construed in accordance with, the laws of ..... (say India) and courts/ tribunals in ....  (say Delhi, India) shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this agreement and the parties irrevocably submit themselves to the exclusive jurisdiction of such courts/ tribunals.

Generally, if the parties to the agreement are persons resident in India and the agreement do not pertain to a cross-border transaction, then the agreement should be governed by laws of India and the Indian courts shall have exclusive jurisdiction over the transaction by default. However, in the event the transaction has a cross-border effect or if one of the party to the agreement in not an Indian resident then the parties are at liberty to choose the governing law and the jurisdiction in which either of the parties resides or of a neutral third country law which is commercially viable.

It is seen in various loan syndication deals between the Indian Borrowers and Southeast Asian or European Lenders wherein English law is taken as the governing law and Courts of England are given the exclusive jurisdiction to decide the disputes between the parties. Section 13 of the (Indian) Civil Procedure Code, 1908 provides that foreign judgments shall be conclusive regarding any matter directly adjudicated upon, except on the grounds mentioned there under.

Though the loan agreement may be governed by English law, quite often, many of the security documents for the same transaction are governed by Indian laws.


It cannot be denied that the boilerplate clauses can be drafted to benefit either of the parties involved. Therefore, it is essential to carefully examine the clauses provided at the fag end of the agreements before signing on the dotted lines.

Transplantation of clauses from one agreement to another without independently considering the operational mechanics of each agreement will be at the peril of parties involved and the consequences of the same would be anyone's guess.


1 The views are that of the Author and not of the Firm.

© 2013, Vaish Associates, Advocates,
All rights reserved with Vaish Associates, Advocates, 10, Hailey Road, Flat No. 5-7, New Delhi-110001, India.

The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions