Boilerplate

Boilerplate clauses (표준조항/標準條項, 계약의 일반조건/契約一般條件) mean, in a general sense, standard provisions contained in an international contract. Sometimes they are used like a real boiler plate, strong and indispensable enough to make a safe boiler or an efficient contract.

In other words, boilerplate clauses are general terms and conditions indispensable to a contract, e.g., governing law, jurisdiction or dispute resolution, waiver or non-waiver, notice, language, etc.

Key words
boilerplate, standard provisions, a conract to which the State is a party, mandatory rule

Mandatory terms and conditions
Boiler plate clauses are included in a contract by a drafter subject to negotiations between contracting parties. Private autonomy governs the drafting of a contract.

In Korea, however, as for an international contract to which the Korean government is a party, a number of general terms and conditions are somewhat mandatory. When the state is a party to these contracts, the Act on Contracts to Which the State is a Party (abbreviated to the "State Contract Law", 국가를 당사자로 하는 계약에 관한 법률) and its Enforcement Decree, Regulations and Guidelines shall apply.

Boilerplate clauses are to facilitate effective and efficient performance of government foreign procurement contracts. Because a government department or agency is a party to the contract, the “Sovereign immunity” doctrine is often at issue.

Since it is generally a worldwide trend in international transactions to apply common law as a governing law, there are several cases where concepts of common law are localized as domestic law. International trade customs, which are not norms, but still formed and positioned as norms in practice, have also been considered.

Applicable law
When a government department or agency is a party to a contract, the afore-mentioned State Contract Law is applied first hand apart from the current Civil and Commercial Acts.

Therefore, in relation to various procurement activities the considerable part of existing general terms and conditions shall be maintained in a way similar to the current provisions.

They are, among others, the Scope of the Contract, Definitions and Interpretations, Performance of Contract, Repayment Guarantee, Specifications of Product, Prior Notice of Part Numbers, Manufacturer's Drawings and Instructions, Installation, Integration and Training Services, Painting and Protective Coating, Inspection and Acceptance, Product Packaging, Marking of Transit Packaging, Notification of Readiness for Delivery, Partial Performance, Liquidated Damages for Delayed Delivery, Warranty, Confidentiality, Appropriateness of Contract Price, Intellectual Property Rights, Costs, Assignment and Novation, Non-Waiver, Effectiveness of Contract, Headings, Language, Implementation of Offset Program, Assurance of Follow-On Support, and Resale.

Further, the followings are contents which should be either added or amended to the current provisions:
 * The United Nations Convention on Contract of the International Sales of Good (“CISG”), to which Korea is a contracting state, has become the governing law of GTC. Accordingly legal uncertainty and lack of foreseeability of performance will be eliminated.
 * INCOTERMS and payment methods using a letter of credit are also largely used in international trade.
 * In connection with the jurisdiction, sovereign immunity and alternative dispute resolution including arbitration are continuously covered by the general terms and conditions.
 * As a participant in a diverse range of international transactions, there is a need to cope with various requirements of the other contracting party. Force majeure under the change-in-circumstance theory grants affected party the right of immunity or termination of the contract.

Suggestions
In practice, the following clauses should be newly added to the gerneral terms and conditions:


 * Representations and warranties, and covenant clauses, though unfamiliar to ordinary Koreans, should be added.
 * In case of the warranty obligation in normal circumstances, it is applicable directly as it is. However, a warranty obligation arising out of the seller’s representations and warranties constitutes an “agreed warranty obligation.” Therefore, if there are detailed representations and warranties, they will take precedence over the general warranty obligation under the Korean Civil and Commercial Acts.
 * A total limit on the seller's liability needs to be set. The parties should be familiar with indirect and consequential damages as part of contractual responsibilities, as well as product liability which is strict liability as part of non-contractual responsibilities. Compensation conditions for indirect and consequential damages, which are practically difficult to reach agreement over during negotiation, should be induced to cover specific damages within the maximum liability limit.
 * If this is not feasible, the governing law for the contract should be agreed to be Korean Law, so that the Product Liability Act, which has been in force since July 2002 as a mandatory applicable law, as well as the Korean Civil Act providing the framework therefor, can apply.