The Art of Contract Drafting: When a ‘Boilerplate’ Clause Really Matters

Drafting any contract is no easy task. There are many moving parts required to ensure the intentions of the parties to the contract are met, and any ambiguities that might lead to a later dispute are minimised if not eliminated.

One such part are clauses that often appear under the heading ‘General’ or such like and invariably ‘bring up the rear’ of a contract. Lawyers speak of these clauses as ‘boilerplate’ clauses because they are often used repeatedly in many contracts with little or no change in wording.  

Boilerplate clauses will often deal with issues such as the giving of notices and when they take effect, how clauses that may be considered invalid in a particular jurisdiction are to be dealt with,  how the relationship between the parties is to be characterised, how the contract can be varied and the acceptable means for signing the contract.

Another such clause is the Governing law and jurisdiction clause. As the name suggests, this type of clause deals with the law that is to govern the interpretation and enforcement of the contract and the place in which any dispute is to be dealt with.

While uncontroversial in 9 out of 10 cases, the decision in Select Harvests Pty Ltd v Jose Borrell S.A. [2025] VSC 839 (23 December 2025) highlights what happens when such a clause becomes controversial.

To quote ChatGPT, “Boilerplate provisions are the legal plumbing of a contract: not flashy, but if they’re wrong, things leak badly.”    

Facts

In 2015, the parties entered into an agreement whereby Jose Borrell S.A. (Borrell), a company registered under Spanish law, was to supply, commission and install an industrial almond roaster for Select Harvest Pty Ltd (Select). The agreement consisted of Borrell’s standard form terms and conditions.

In April 2019, Select alleged that a fire started in the roaster, which damaged both the roaster and Select’s Australian premises, resulting in business interruption losses. Select further alleged that the fire was caused by Borrell’s negligence, alternatively, by its breaches of the agreement.

Clause 15 of the agreement provided:

15. GOVERNING LAW AND JURISDICTION

The processing of any order and completed purchase implies
acceptance by Buyer of these terms in each and every clause.
In the event of any dispute that may arise from the
contracted operation, the parties submit to Spanish Law and
the jurisdiction of the Courts of Dénia (Alicante), having
waived their own jurisdiction.

Select issued proceedings in the Supreme Court of Victoria. Borrell applied to the Court for orders that service of the proceedings on it be set aside and that it be dismissed or permanently stayed on the basis the Courts of Dénia had exclusive jurisdiction to deal with any dispute because of clause 15.

On 30 October 2005, an Associate Justice made the orders sought by Borrell finding that clause 15 was an exclusive jurisdiction clause.

Select appealed the Associate Justice’s decision. The appeal was heard by Delany J on 17 December 2025.   

Decision

The central question of the appeal was whether clause 15 was an exclusive or non-exclusive jurisdiction clause.  If the former, the proceeding could not be brought in Victoria; if the latter, the reverse would be the case.

Delany J agreed with the Associate Justice that in construing clause 15, the Court needed to apply the principles relevant to the construction of a commercial contract and be approached through the lens of the reasonable businessperson.

In construing clause 15, the Court focussed on the word “submit”. The parties accepted that so far as the clause referred to Spanish law, the clause was an exclusive jurisdiction clause. In dealing with Select’s arguments that the remainder of the clause suggested it was a non-exclusive jurisdiction clause, His Honour said it would be an odd result if the word ‘submit’ had a different meaning as it relates to Spanish law than it had in the same clause, separated only by the conjunction ‘and’, when it came to the question of the jurisdiction of the Courts of Dénia.

His Honour observed it was desirable that the word ‘submit’ should be interpreted consistently when used in clause 15. However, His Honour also said that such an approach needed to be balanced against other clauses of the agreement that used the word ‘exclusive’. In short, for His Honour, the $64 question was “Why not use the word ‘exclusive’ in clause 15 if that is the intention both regarding the governing law and the choice of jurisdiction?”

His Honour answered this question by saying the reference to submission to Spanish law was not an “option or a choice” but an exclusive reference to the law to be applied. While the draughtsperson could have written ‘submit exclusively to Spanish law’ (bolding added), there was no need to use the word ‘exclusive’ given it was clear that only Spanish law was to be applied.

His Honour was satisfied that clause 15 used the same language to both the governing law and jurisdiction, that the absence of mandatory language (that is us of the word ‘exclusive’) was not determinative and therefore the clause should be interpreted as an exclusive jurisdiction clause.

As an alternative argument, Select submitted that the words at the end of the clause, “waived their own jurisdiction”, meant that Borrell had waived its own jurisdiction, being the Courts of Dénia, meaning the clause produced no jurisdiction, was therefore neither clear nor ambiguous and could not be determined to be an effective exclusive jurisdiction clause. This meant the jurisdiction may be determined to be the place of the tort (Borell’s alleged negligence), being Victoria.

Hi Honour resolved this issue by holding that the first sentence of clause 15 refers to the “Buyer”, namely Select, who is taken to accept “these terms in each and every clause.” and that construing the clause so it does not lead to a “commercial nonsense”, the waiver of jurisdiction could only refer to Select having done so.

His Honour held neither ground of the appeal had been made out and dismissed it with costs of the appeal to be paid by Select.

Conclusion

This case highlights the importance of carefully wording a Governing law and jurisdiction clause, regardless of whether the parties are located in the same or different jurisdictions and whether those jurisdictions are domestic or international.

While using a ‘precedent clause’ may be easy and ‘safe’ most of the time, in cases such as this one, it may lead to considerable commercial difficulties, not to mention legal and other costs, if a dispute subsequently arises.