Beware of Boilerplate

boil•er•plate (boi l r-pl t ) n.

1. A steel plate used in making the shells of steam boilers.
2. Inconsequential, formulaic, or stereotypical language: The new provisions of the lease renewal were merely boilerplate.

The American Heritage® Dictionary of the English Language, Fourth Edition copyright ©2000 by Houghton Mifflin Company. Updated in 2009. Published by Houghton Mifflin Company. All rights reserved.

The first type of “boilerplate” defined above is pretty tough stuff. It can be up to twelve (12) inches thick and stop rocks, arrows, maybe even Greek fire and low caliber ammunition. Tough, one-sided contract and lease language is also referred to by many as “boilerplate”. What amazes me, however is how many tenants, landlords, brokers, attorneys and dictionary writers (see above) believe such language is “inconsequential” or unenforceable, and how many don’t worry about such language because they deem it “merely boilerplate”.

Notwithstanding the above, this author would like to caution you to worry, if you ever find yourself on the “wrong side of the boilerplate”. Contrary to “Mr. Heritage’s” beliefs, odds are that boilerplate in a commercial lease in Ohio (and in many other jurisdictions) will most likely be enforceable.

The reason such boilerplate will most likely be enforceable is the nature of commercial leasing law vs. residential leasing law in Ohio.

First, the Ohio Landlord-Tenant Act (ORC Chapter 5301 et seq.) which is replete with tenant protective provisions does not apply to commercial leases.

Second, the deference given to residential tenants (who are often in an unequal bargaining position from their landlords) in courtrooms does not exist with regard to commercial tenants. Judges assume (rightly or wrongly) that commercial tenants and landlords are on equal footing with equal sophistication in business and lease matters.

Generally speaking, Ohio courts will typically uphold language (even tough, boilerplate language) in a commercial lease, unless it is contrary to statutory law or public policy.

As an example, consider the following language: “The Lessor, at any time after Lessee’s default, at its election and without notice, may avoid and terminate this lease, re-enter into possession of the demised premises, with or without process of law, and expel, remove or put out Lessee or any other person or persons occupying said premises, using such forces as may be necessary to do so and to repossess said premises; and sue for and recover all rent as it becomes due under the lease”. If a commercial landlord in Ohio wants to provide such a boilerplate default provision comparable to the foregoing (that gives the landlord the right to a non-judicial self-help eviction and the right to sue for all rent from the tenant without any effort to mitigate damages), will such boilerplate be consequential and enforceable? Based on the applicable case law in Ohio, the answer is yes.

The right to a “self-help” eviction, provided there is no breach of the peace has been recognized in Ohio since 1862, most notably in the Cuyahoga County Court of Appeals case, Northfield Park Associates v. Northeast Ohio Harness et al, 36 Ohio App 3d 14 (1987). While non-judicial, residential evictions are prohibited by the Ohio Landlord Tenant Act (Section R.C. 5321.15(A), not so with commercial evictions. As explained by the court in Northfield Park: “The fact it [the Legislature] has considered self-help inappropriate in residential situations, but has enacted no legislation prohibiting such provisions in commercial settings, must weigh against a finding that these [self help] provisions are against public policy”.

The court in Northfield Park further reiterated the principle of deference to commercial lease/contract language by stating: “We cannot say, as a matter of law, that a self-help provision in a commercial lease is against public policy where repossession of the premises takes place without a breach of the peace and with the acquiescence of the lessee or its agent, especially when the parties voluntarily entered into the lease agreement knowing full well the nature and implication of the self-help provision contained therein”.

What about boilerplate language allowing a landlord to sue to recover all rent as it becomes due under the lease, without even trying to re-rent it, and mitigate (or lessen) its damages? That’s just inconsequential boilerplate, right Mr. Heritage?

Well, it was certainly of consequence to the Ohio Court of Appeals for Lucas County in New Towne Limited Partnership v. Pier I Imports, 1996 Ohio App. LEXIS 3203. That court held: “Parties of equal bargaining power are free to enter into any agreement the terms of which are enforceable at law. A rental agreement may include any terms which are not inconsistent with or prohibited by law, or against public policy. In the present matter, the term negating any duty to mitigate damages contained in the lease does not violate any principle of law. Similarly, it does not injure the welfare of the public in any way. As a result, the provision does not violate public policy."

Ohio courts are replete with language like the above and the following: “when reviewing lease provisions, a court is to presume the intent of the parties is in the language they used, and if the contract is clear and unambiguous, then we must follow the contract’s expressed terms and must not go beyond the plain language of the contract”. Langfan v. Carlton Gardens, 2009 Ohio App. LEXIS 2863.

This author has not uncovered any cases dismissing lease language as “merely boilerplate”.

So what is the moral of this story? All language in a commercial lease in Ohio is of consequence; boilerplate or not. The best weapon against boilerplate language is the delete key. Negotiate away boilerplate language before signing the lease. Afterwards, odds are you will be no more successful shooting holes through boilerplate language in court as you would be shooting holes through the 12 inch thick steel kind of boilerplate.