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Headings for Information Only (Common Clauses)

Updated: Feb 13

(This post is part of a series called “Common Clauses,” focused on explaining so-called boilerplate provisions of contracts. Click the link to see other posts in this series).


You’ll find that many contracts remind the parties that the headings (the titles above each new section) are simply for information or convenience, and they are not terms of the agreement.

Believe it or not, there are reasons that this clause is included in contracts. This issue has been litigated, and has led to some pretty absurd results.


What does a typical headings clause look like?


"The section headings contained in this Agreement are for convenience only, and are not intended to define, expand, or limit the scope of the language or the intent of any section contained in this Agreement."


This is fairly typical. You can find numerous examples online, some better than others.


When does this kind of issue arise?


Attorneys often use templates when drafting contracts. Non-attorneys are able to find numerous templates online, and often draft their own. This leads to a lot of copying-and-pasting. The result is an occasional section or section heading in the wrong place.


So, for example, the person drafting a contract might accidentally copy a forum selection clause (e.g., which state to file suit in) under a "venue" heading (e.g., the county in that state). This could lead to litigation, but is more likely simply going to be embarrassing to the drafter.


However, if a notice requirement ("parties must provide notice to the following addresses...") is misplaced, then a non-diligent reader might send it to the wrong person. Or if there is a section titled "Consideration" (which refers to the bargained for exchange of goods or services, which is usually the primary part of the agreement) that leaves out some important part of the consideration, the breach of that excluded term might not be considered material.


Why “convenience”?


The goal here is to make sure that headings are interpreted only if they make the meaning clearer.


Failure to include this type of clause can actually create ambiguity where the text does not reflect the heading.


What happens if this is not included?


Again, an incongruity between the heading and the substance of the headings' section is more likely to be a cause for embarrassment to the drafter than anything else. However, they can raise real, substantive issues, as addressed below.

To give a hypothetical example, consider that there is a "headings" clause that says "headings are for convenience and are of no substantive effect." Elsewhere in the contract, a clause with the heading "Injunctive Relief Only," under which, the section says "the parties may only sue for actual damages" (which means money, not an injunction). If one of the parties sues for an injunction, they will lose.


Are there any real-world examples of this leading to litigation?


There are not many examples of a headings clause (or lack of one) leading to litigation. In many cases, an ineffective or inappropriate headings clause is one symptom of larger problems. That is, the contract has bigger issues for a court to decide than the issues arising from a headings clause.


That said, there are a few examples. One such case from the United Kingdom called Citicorp International Limited v Castex Technologies Limited (2016). The case is complex, requiring a fairly sophisticated understanding of business law to keep the facts straight. But importantly, a headings clause stated that "[h]eadings shall be ignored in construing this." Nevertheless, the court still used the headings as an interpretive aid. This was consistent with prior case law saying that they could still be used so long as the heading interpretation was consistent with the substance of the clause itself.


Conclusion


Usually, "headings" clauses help rushed, unknowing, or negligent drafters avoid embarrassing results. In that way, "headings" clauses typically limit the ability of courts and litigants to get creative in interpreting mere descriptors. If nothing else, when you reach the "headings" section of a contract, treat it as a reminder to double check the headings with their respective substance.

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