Updated: Feb 4
While the “by self” attitude is great in most spheres of life, it may not be such a good idea when it comes to legal work. Lately, I’ve been getting some clients asking me if they can put together a DIY contract taken from the internet to save on attorney’s fees. First off, seeking a lawyer’s advice on whether online contracts are acceptable is like asking a doctor if you can self medicate. Secondly, online contracts are a terrible idea for a number of reasons.
You may not know what you are getting into
Most times, you will read the contents of a document before signing. But you may not necessarily understand each and everything written in there. Insurance agreements are classic examples. It takes me a little while to fully understand the terms of insurance policies and the fine print. But when you need a contract for your clients or vendors or suppliers, you want to be fully aware of what you and the other party are signing off on. Leaving a legal contract to open interpretation spells bad news for everyone involved. Even for the lawyer you may need to hire if things went unfavorably.
The terms may not be ideal for your business
Contracts vary for small businesses and big, service based businesses and product based. Contract terms vary based on the type of business you are. It is likely that a contract for a product based business does not take into account the liabilities of a services based business. For example, a product based contract will have disclaimers relating to merchantability, which will not be applicable to a health coaching business who would need medical disclaimers because health coaches are not medical professionals.
The laws of your State may not be included
We have a dual court system where the courts are divided into two, federal and state, following federal state laws. Each state has its own specific laws which are interpreted by the courts in that state. Having a clause that may be recognized in one state but not in the state where the contract will be performed or enforced may render the contract invalid.
DIY contracts can be repetitive and cause confusion
I’ve seen DIY contracts where the same thing is repeated in several different places in slightly different words. Sometimes, such repetition can totally cancel out the meaning and significance of the clause. Other times, I’ve seen clauses for arbitration, mediation and court intervention for dispute resolution. So which one are the parties supposed to seek? This sort of confusion can cause the parties to spend considerable time and financial resources merely to determine which forum is right to resolve the dispute.
If you are getting into business or collaborating with someone to start a business, take legal advice in laying out the terms of the business. A lawyer will help you think of adverse situations that could arise in a partnership/collaboration down the line and draft up terms to reduce your liability in case of a disagreement. At Nupur Shah Law, we help our clients set up legal contracts to reduce their liability and exposure in a business.
Call us at 646-820-1366 or email us at email@example.com. I am happy to have a complimentary conversation with you on how you can best protect your interests in your business.