Beware The Boilerplate: Issue Four

Multiple Contracts with Similar (But Not Identical) Clauses

In most commercial loan transactions, there will be multiple documents—for example, a note, a deed of trust and a guaranty. Many times, each of these documents contains provisions intended to have a uniform effect. These are often the boilerplate clauses copied and pasted from one deal to another, but they have critical importance in the context of litigation. They contain, for example, provisions about venue, choice-of-law, waiver of jury trial and merger/integration. As a general rule, contracts executed contemporaneously will be construed together. Jim Walter Homes, Inc. v. Schuenemann, 668 S.W.2d 324, 327 (Tex. 1984).

Creating ambiguity from three unambiguous documents.

A litigator faced with an unfavorable contract provision will often try to argue that it means something less burdensome to his client. One way to do so is to parse the language between contemporaneously executed documents, trying to ascribe meaning to relatively minor differences in the text. Take, for example, the following jury waiver provisions taken from the note, deed of trust and guaranty in a single transaction:

Note Jury Waiver

BORROWER . . . HEREBY WAIVE[S], TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS NOTE, THIS NOTE, THE SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES DIRECTORS OR AGENTS IN CONNECTION HEREWITH.

Deed of Trust Jury Waiver

EACH OF BORROWER AND LENDER WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER OR IN ANY COUNTERCLAIM ASSERTED BY LENDER AGAINST BORROWER, OR IN ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS...