When forming contracts, parties to the contract often use templates or forms with boilerplate clauses. Such clauses refers to the standardised clauses in contracts, and they are to be found towards the end of the agreement. Including boilerplate clauses is the process by which parties to the contract may better define their relationship and the will to provide certainty if terms in the contract are ever disputed. Boilerplate clauses are standard contractual terms that are routinely included in many contracts.

The inclusion of boilerplate clauses in agreements affords clients with the necessary protection provided by the clauses.

Suppose an agreement did not contain a standard non-variation and non-assignment clause and the following scenario occurs: party A concludes an agreement with party B for on-going cleaning services in a shopping centre owned and operated by party A. Party A at a point in time sells the shopping centre and all its rights and obligations to party C, all the while having failed to pay party B for the services rendered. When instituting the necessary legal proceedings for the recovery of its fees which party (between party A and C which now owns the shopping centre together with the associated rights and obligations) would be liable to party B.

The Supreme Court of Appeal (“SCA”) dealt with this particular scenario in Loch Logan Waterfront (Pty) Limited and another v Bentel Associates International (Pty) Ltd.^[1] In this case, the second appellant concluded a Professional Consultancy Agreement with the respondent to design extensions of a shopping centre known as Loch Logan Waterfront, which was built on land owned by the second appellant. In October 2005, the second appellant sold the shopping centre and the immovable property on which the centre was built to the first appellant. The dispute between the parties arose when the respondent claimed from the appellant’s payment of outstanding fees and disbursements.

The appellant’s argued that the Agreement had been varied which resulted in a change of contracting parties, where the second appellant was substituted with the first appellant, while the respondent asserted that there has been no variation or changing of contracting parties.

The SCA held that certain clauses in the Agreement provided for the manner in which variations to the Agreement should occur (clause 11.4 – reduced to writing and signed by both parties). The court stated that in order for the kind of variation that the appellant’s contend to be effective, the respondent would have had to agree on the delegation of the second appellant obligations to the first appellant. Given that this did not occur, the SCA found that the Agreement had not been varied.

Drafters of agreements needs to understand the purpose of the inclusion of certain boilerplate clauses and not simply regard them as ‘add-on’s’ and neglecting to insert them, thereby negating to provide clients with the necessary protection afforded by the clauses.

Author:

Lerato Thini, Associate, LNP Attorneys

[1] (147/2015) [2017] ZASCA 135.