When you are the owner of your own business, you should always make sure that you have clear and enforceable contracts in place for your business dealings. Contracts ensure all parties are clear about the terms of a deal and that there is a procedure when minds change.
Many business owners incorrectly believe well-drafted contracts can be expensive to create. As a result, businesses often cut corners. Entrepreneurs often use Google to find a contract template, give the document a cursory review, and start using it for their own business. They might feel that the contract is “good enough” and that it was “probably created by a lawyer.”
Unfortunately, this practice can lead to significant problems down the road. Here are four reasons why you should never use contracts that you get online.
- You don’t know that a competent lawyer created the contract
When you find a contract on the internet, you do not know the source of the document. It’s possible the contract was created by a non-lawyer who simply assumed he or she could cobble a contract together in whatever way they knew best. Even if the contract was prepared by a lawyer, you do not know if that lawyer was competent or knew the particular laws and practices of the state where you reside. If you don’t know for sure that the drafter of a contract knew what they were doing, you shouldn’t put the outcome of your business deals in their hands.
Also, if you have no legal training you have no idea if the contract template satisfies your needs and adequately protects you and your business. Does the contract properly deal with copyright ownership? Does it limit your liability? Are any essential features missing? It can be impossible to tell without speaking to competent counsel.
- The contract you find may not be meant for your industry
Businesses need to have their contracts address issues that are specific to their industry. For instance, if you’re trying to hire someone to design a website for your business, you need the contract to specify who holds the copyright to the website once it’s created, what parts of the website design the designer is responsible for, and if there is a user satisfaction guarantee offered. These are items that are specific to web design agreements that may not apply to a contract in another industry.
If you use a contract intended for another industry, it may omit items that are essential to your business and include provisions that are not applicable to your industry. If you aren’t a lawyer, you won’t know what was missing – and what was extraneous – until it’s too late.
- There is the question of jurisdiction
Laws can change from one state to another, or even city by city. A contract drafted for one jurisdiction may not make sense for another.
For instance, if you have the bad luck to have a contract dispute, you may prefer to have it resolved through a process known as arbitration rather than in court. Arbitration can be cheaper and faster than full-blown legal proceedings. But arbitration is conducted differently in different jurisdictions. If your contract is written for a different jurisdiction, its language may not adequately protect your specific interests.
- You don’t know how dated the contract is
Contracts found online typically don’t identify when they were drafted. Laws and legal requirements evolve regularly. For instance, a web design contract created a few years ago may not address all of the social media that is prevalent now but not around then. A web design contract without clauses pertaining to social media would be meaningless today.
It’s important to be wary when you deal with contracts.
You need to read and understand a contract before you sign it. If you simply pick a contract off the internet, you don’t know what you’re signing up for.
While retaining a lawyer to create a contract comes at a cost, using the wrong contract template can be far more costly. Invest in yourself and your business. Paying a lawyer now may very well save you exponentially more than if you end up in a subsequent contract dispute.
The Law Offices of Robert L Hill, APC is here for your legal needs. Do you need a contract? Do you not understand an agreement you have already made? If you are in the Carlsbad, California area and are in need of legal advice for your business, contact us today 760-448-4425. The cost of proceeding alone may be more than you could have ever imagined.