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This article is written by Manasi Sheth pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from Lawsikho.

Introduction

The first known use of the word ‘Boilerplate’ was in the year 1893, the meaning of which as per Merriam Webster is either a ‘standardised text’ or ‘formulaic or hackneyed language’. According to the Cambridge dictionary, it is something ordinary or unimaginative, a text which can be copied and used in either legal documents or in computer programs, with very little to no changes.

Boilerplate clauses in legal documents are standard, miscellaneous, or general clauses that are generally found at the bottom of almost all legal documents. They are very generalised causes that provide for either an uncertain, unforeseen future or which law will govern the entire agreement or how in case of disputes those disputes will be settled. They are considered to be secondary to the main clauses such as payments, terms or obligations and are rarely negotiated by the contracting parties. Not often thought about, they are generally just copy-pasted by people preparing the documents but a recent pandemic has shown us that even though these clauses are considered secondary, they should not be considered unimportant. Let us further see, what are some of the common boilerplate clauses and how can we draft one for a hospital.

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Commonly used boilerplate clauses in an agreement

This is a non-exhaustive list of some of the commonly used boilerplate clauses in agreement:

  • Entire Agreement Clause,
  • Other Non-Performance Clause,
  • Arbitration Clause,
  • Remedy/Dispute Resolution Clause,
  • Survival of Reps and Warranties Clause,
  • Merger Clause,
  • Multiple Agreements Clause,
  • No-third Party Beneficiaries Clause,
  • Waiver/ Non-Waiver Clause,
  • Assignment Clause,
  • Notice Clause,
  • Waiver Clause,
  • Force Majeure Clause,
  • Severability Clause,
  • Governing Law and Jurisdiction Clause,
  • Non-Reliance/Reliance Clause,
  • Health and Safety Clause,
  • Time of the essence Clause,
  • No Partnership or agency Clause,
  • Language Clause,
  • Counterparts Clause,
  • Testimonium Clause.

Advantages of a lease agreement between a hospital and a medical college

Entering into a lease agreement can be advantageous for both a hospital and a medical college. If we look at it from the medical college’s point of view, it can be beneficial for the students to learn from professional doctors, they can also apply for internships at hospitals within their college campus. If the agreement between the two allows, then the medical college can easily procure dead bodies from the hospital morgue which could help the students learn the live operating techniques in their college. The college can also invite practising doctors to give special lectures to the college.

If you look at it from the hospital’s point of view then the doctors can give internship programs to deserving students and then reserve them as resident doctors after their graduation, they can also increase their customer base through word of mouth from the students. 

Many doctors consider teaching medical students as the new way of staying current in the medical field. So even doctors sought to teach hospitals to practice in an environment best committed in class-care and learning.

So, a teaching hospital becomes a mutually beneficial agreement for both the hospital and the medical college, it will promote a culture of learning and growth in the medical field, such hospitals affiliated with medical colleges usually find themselves having access to cutting-edge treatments and technologies and research opportunities for career advancement. Thus, a lease agreement between a hospital and a medical college can be mutually beneficial for both.

Is it necessary to include boilerplate clauses?

As such, there is no legal requirement to include boilerplate clauses in a commercial agreement. Contracts can fare well even without them but recently after this pandemic, advocates and lawyers are truly understanding the real value of the inclusion of boilerplate clauses and also, they provide to the contracting parties certainties about the future.

Which all clauses to include in an agreement depends on what type of agreement you are trying to draft. Boilerplate clauses are standard and normally you can just keep on using the same matter with certain word changes making sure the words are suitable for the agreement and draft them accordingly.

How to draft boilerplate clauses for the lease agreement of a hospital and medical college?

Though these boilerplate clauses find themselves placed at the bottom of a contract, they certainly cannot be ignored. Without these boilerplate clauses, the parties will have to spend time and drain resources on where to settle the dispute or they may waste time in working out if the content discussed over email should be included or not or maybe a supplier will not be able to get out of his obligation even if he cannot fulfil them because of an act of God. Though the operative clauses in an agreement are the most important clauses, these boilerplate clauses should not be taken lightly and the drafter should keep in mind simply not copy-paste material from the internet or past agreements but to modify them as per the requirements of the contract they are drafting. Here’s a list of a few boilerplate clauses used for a lease agreement and how to draft some of them.

1. Other non-performance clause

Adding in other non-performance clauses will oblige the lessee to fulfil all other terms which are set forth in the lease agreement. Non-Performance will provide for what will happen in case of default by both parties to the agreement. So, it is necessary to include as what will be considered as default, what is the basic course of action which should be followed first, mentioning the time frame within which the performance is to be delivered and then the second course of action shall provide for penalty for such default. This will clear the set of performances for both the hospital and the medical college and also help out further in case of non-performance by either. For better understanding let’s try drafting this clause:

Other non-performance clause:

The Lessee’s failure to perform, keep or fulfil any covenants, undertakings, obligations, conditions, representations or warranties or failure to comply with any other terms of this Agreement is “Default: and becomes an “Event of Default” if the Lessee fails to cure the Default within 30 days after receipt of notice of Default from the Lessor.  Without prejudice to the generality of the aforesaid, the following shall constitute a Default (and failure to cure the default within the period aforesaid shall constitute an Event of Default), viz.:

  • any act or omission on the part of the Licensee that may structurally damage the Leased Premises,
  • non-payment of statutory taxes including GST or any other tax/levy, by whatever name canned,
  • any criminal liability arising as a result of the use of the Leased Premises by the Lessee,
  • any structural alteration made post the Commencement Date to the said Leased Premises, without prior approval of the Lessor, 
  • any act by which any other person is permitted to occupy or use any part of the Leased Premises or to carry on any activity therefrom, other than as permitted or authorized hereunder, 
  • any transfer of stake in the Lessee by any arrangement other than in the manner and to the extent permitted and authorized hereunder,  
  • conducts activities not permissible as per government policy from the Leased Premises.

2. Remedies clause

Adding a remedies clause will provide for what recourse the parties should take in case of default by either party. If such a clause is not added then in the event of default there will be chaos and confusion but providing a clear recourse as to what the parties are supposed to do in case of default will give them a clear headway.

  1. Recourse by the lessor:

Upon an Event of Default, the Lessor may take any or all of the following actions: (i) initiate proceedings, including actions for specific performance, injunctive relief, declaratory relief, and any other relief or remedy, and (ii) forthwith and without being liable to grant any further time or opportunity to rectify or repair the breach terminate this Agreement.

2. Non-exclusive remedies and rights:

Each remedy and right in this Agreement is in addition to and not in substitution for any other remedy or right under the applicable law.

3. Survival clause

The survival clause shall provide for clauses that are to survive even after the termination of the entire agreement. Even if the entire agreement comes to an end, the clauses mentioned in the survival clause shall survive the agreement. Like;

Survival clause:

The terms of the Remedies clause shall survive Termination.

4. Handover clause

Handover clause provides for a peaceful handover of all furniture, fixtures, benches, laboratory items, etc by the lessor and keys, and possession by the lessee on the expiry of the term of the lease and before such handover the lessee shall clear all his debts and dues and after the handover, such lease shall stand to be revoked. The clause should also mention the course of action in case of any problems during the handover.

5. Dishonour of cheques

Just like most boilerplate clauses, it is not necessary for the lease agreement to contain this clause but think about it, how beneficial this clause will be to the lessor in case either of the cheques given by the lessee dishonours and results in his loss. The penalty interest rate set out in the agreement will provide for in case either of the cheques of the lessee dishonours.

6. General indemnity

The indemnity clause is generally to keep indemnifying the lessor against any damages caused by the lessee to the leased premises, you can also include a clause to indemnify the lessee in case the lessor fails to oblige his responsibilities towards the lessee.

7. Time is of the essence

A clause stating that the parties shall perform all their obligations due within the agreed time span. This will indeed ensure timely discharge of duties so that the other party does not suffer for the same. For example,

Time is of the essence clause:

The parties agree and acknowledge that time is of the essence for the performance by the Parties of each and all of its obligations under this Agreement.

The Lessee agrees and confirms to hand over TDS Certificates (within the time as per applicable law) and payment of all amounts and TDS by the Lessee to Lessor, or to the service providers and statutory authorities relating to the Leased Premises and inter alia as stated in this Agreement.

8. No waiver clause

If any party fails to ensure any one or more instances, covenants or conditions it shall not amount to waiver. The agreement shall remain valid and waiver of any sort shall be given only by written consent executed by the parties. Such a clause shall protect the interest of the agreement in case of waiver of one or more terms.

No waiver clause:

The failure of any Party to enforce in any one or more instances, the performance of any of the terms covenants or conditions of this Agreement shall not be construed (or pleaded) as a waiver or relinquishment of any right or claim granted or arising hereunder or of the future performance of any such term, covenant or condition, and such failure shall in no way affect the validity of this Agreement or the rights and obligations of the Parties hereto.  The Parties acknowledge that a waiver of any term or provision hereof may only be given by a written instrument executed by any Party hereto.

9. No partnership or agency

A clause stating that the lease agreement should not be considered as the creation of a partnership or agency and that neither party shall have authority to represent the other or make commitments on behalf of the other.

No partnership or agency clause:

This Agreement shall not constitute or imply any partnership, joint venture, agency, fiduciary relationship or relationship between the Parties other than expressly provided by this Agreement.  Neither Party shall have nor represent that it has any authority to make any commitment on behalf of the other Party.

10. Termination of all previous agreements, arrangements and understanding

A clause stating that on the execution of agreement all other previous understanding, agreements, arrangements between the parties shall be terminated and that this agreement shall be the final and only agreement between them. This will ensure uniformity and avoid confusion between the parties as to which document to refer for which clause.

Termination of all previous agreements, arrangements, understandings clause:

This Agreement constitutes the entire arrangement between the Parties relating to the subject matter hereof and all previous agreements, arrangements, understandings between the parties are hereby superseded and shall not survive the execution of this Agreement.

11. Non-compete clause 

A non-compete clause in a lease agreement is also referred to as an exclusive use clause and refers to a lease provision that prevents leasing the development premises to a direct competitor or to a tenant operating the same kind of business. A non-compete clause shall protect the hospital and the medical college from any competition on the leased property because two hospitals and medical colleges on the same property wouldn’t make sense, would it? And why would anyone be willing to pay a large sum of consideration where there is so much competition.

12. Force majeure clause

Force majeure clauses should include all or any acts or events beyond the control of either party and list out a few of them but never limit them to it, keep the scope of events wide open with the inclusion of words like ‘including but not limited to’. Such a clause shall protect the parties in case of unfavourable situations.

The clause should also contain what are the obligations of both the parties in case of such force majeure events and what action is to be taken.

Force majeure clause:

  • The parties shall not be liable or affected in relation to this Agreement for any event or act which is outside or beyond the control of either party including without limitation, war, warlike conditions, hostilities, mobilization, blockade, embargo, riot, looting, strike, lockout, epidemic, floods, earthquake, fire, government orders beyond the control of the parties, etc. (“Force Majeure”).  
  • If at any time during the term of this Agreement the Leased Premises and/or the said Building are destroyed and/or damaged, either wholly or partially, by force majeure (and not attributable to any act of the Lessee or any person/s claiming through or under it) whereby either party hereto is prevented from using the Building/Leased Premises and/or any part thereof, the Lessors shall endeavour to restore the Leased Premises and/or the said Building at its own cost and expenses, within a period of 180 days.  In such an event during the period of restoration, the obligations of the parties shall be suspended.  In the event the Leased Premises and/or the said Building cannot be restored within a period of 180 days as aforesaid, then in that event, either party shall have an option to terminate this Agreement by giving 15 Working Days written notice, and thereafter neither party will have any claim against the other save and except as provided herein.  However, the interest-free refundable security deposit shall be refunded to the Licensee in accordance with the terms set out in the Security Deposit clause of this Agreement.

13. Partial invalidity or severability

Including this clause in the agreement shall severe any clause which is prohibited, unenforceable by the law, illegal only to the extent of that clause and shall protect the other clauses of the agreement from becoming invalid. So, such a severability clause shall protect the entire agreement from becoming invalid in case of events.

Partial invalidity or severability clause:

Any provision of this Agreement which is prohibited, unenforceable or is declared or found to be illegal, or void shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provisions or the remaining provisions of this Agreement  If any such invalidity substantially affects or alters the commercial basis of this Agreement, the Parties shall negotiate in good faith to amend and modify the provisions and terms of this Agreement as may be necessary or desirable in the circumstances to achieve, as closely as possible, the same economic or commercial effect as the original provisions and terms of this Agreement.

14. Notice clause

Notice clause should contain either a proper registered address, email address of the parties where notices if any shall be served to the parties. Any change in address shall have to be notified if not the notice will be considered as served.

Address for notice:

All notices and other communications in connection with this Agreement must be given in writing by an officer of the Party serving such notice or other communication and must be left at the address of the addressee specified below or sent by a reputed courier to the address of the addressee or sent by e-mail (in the event of an email a confirmation copy being sent by registered post) to the e-mail address of the addressee which is specified below or by hand delivery to the address of the addressee specified below or if the addressee notifies of another address or e-mail address then to such address or e-mail address:

*Mention the postal address and email address of both the Parties*

15. Arbitration and dispute resolution clause

In case of any dispute arising in connection with this agreement, this clause will entitle the parties to approach arbitration. This clause should also mention the time period within which the arbitrator is to be appointed, the number of arbitrators to be appointed, place of arbitration, the language of arbitration, who shall bear the cost of arbitration and what if the dispute cannot be resolved through arbitration.

Arbitration and dispute resolution clause:

  • Any dispute arising out of or in connection with this contract in the interpretation, application or performance of this Agreement shall be submitted for resolution or adjudication for final and binding arbitration to a sole arbitrator who shall be nominated and appointed by the parties on mutual understanding.  Such reference to arbitration will not entitle or enable the Lessee to withhold the Fee and any payments due and payable to the Lessor and/or to refrain from complying with any of its obligations under this Agreement and on complying with the terms and conditions contained in this Agreement, the Lessee shall be free to operate its business from the Leased Premises.  If a sole arbitrator is not appointed by the Parties within a period of 30 days, then both Parties shall appoint one arbitrator each, and the two arbitrators so appointed will appoint the third arbitrator.
  • The arbitration will be governed by the Arbitration and Conciliation Act, 1996 including any statutory amendments or re-enactments thereof for the time being in force and rules made thereunder.
  • The seat of arbitration shall be Mumbai.  The arbitration proceedings will be conducted in English.
  • The costs of arbitration will be initially paid jointly by Parties hereto in equal shares; the arbitrator will be entitled to determine by the Award as to who will finally bear the costs and in what proportion.
  • The Award of the arbitrator shall be binding on both Parties.
  • If the sole arbitrator appointed by the parties refuses to act or is incapable of acting, then the parties shall be entitled to appoint a new arbitrator; the substituted arbitrator will have like powers to act on the reference and make an Award as if he had been appointed in accordance with the terms of this Agreement.

16. Stamp duty and registration charges

This clause shall spell out who is responsible for the payment of Stamp duty and Registration charges related to the agreement.

Stamp duty and registration charges clause:

Stamp duty and registration charges payable on these presents or on any other document/writing executed or to be executed in pursuance hereof shall be borne and paid by the Licensee alone.

17. Alterations to the agreement

Any alterations to the agreement can be added as an addendum to the agreement instead of making a new agreement every time there are any changes or alterations to be made in the agreement. This clause will cut short the hassle of creating a new agreement each time any changes are added to the agreement.

18. Governing law and jurisdiction

This clause is very important in terms when any dispute arises between the parties, this clause states which law governs this agreement. For example, if the agreement is executed in Mumbai and the property is situated in Mumbai then, Mumbai High Court shall have jurisdiction over the same. In the case of M/s Dhanrajamal Gobindram v/s M/s Shamji Kalidas and Co., AIR 1961 SC 1285, (1962) 64 BOMLR 169, 1961 3 SCR 1029 it was the intention of the parties which showed in the agreement that was considered as jurisdiction.

19. Entire agreement cause

The entire agreement clause means that this is the entire agreement and shall prevent either party from relying on any previous agreements, negotiations, or discussions that have not been set out in the agreement.

Conclusion

While these boilerplate clauses are standard in most contracts, they serve an important purpose in clarifying the relationships between the parties that is not mentioned in the operative part of the contract. Though these clauses can be confused with being the same they are not one size fits all kinds of clauses and most will be tempted to do just. These clauses should be carefully worded and drafted as per the needs of the Agreement so that the rights and obligations of both the hospital and the medical college do not overlap with each other.

References

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