Internet Contracts Can Lead to Legal Risks and Issues
These days, it feels like you can literally find anything on the internet. You can buy your weekly groceries, hire a dog-walker, and rent your apartment to a stranger in a matter of minutes. You can invest in a trendy new start-up company or get your dad that rare music vinyl he has always wanted. Need a “Mullet Headband with Hair Extensions” for your dog? Amazon.com has you covered for the low price of $10.57 – with free shipping!
How about legal contracts? Yep, you can find those too, in abundance. A Google search for “free sales contract” returns more than 330 million hits. Searching for “non-disclosure agreement” gets you 444,000 results.
Look, I can understand the temptation of downloading a “form” contract from the internet. It may save you a call to your lawyer, and the associated expense, at least in the short term. However, using a form contract without having a lawyer review it can lead to costly legal battles down the road.
Here are just a few of the legal risks and issues that can arise when you download and use a form contract from the internet:
- The unique elements of a transaction can be difficult to integrate into a form contract. While it’s possible that a form contract might work for a straightforward, cookie-cutter transaction, it’s likely to be inadequate where the parties have negotiated non-standard deal points. Further, because contractual provisions are interrelated, trying to squeeze a customized provision into the template contract without a lawyer’s help may lead to inconsistency and ambiguity, which can result in costly legal fights.
- Form contracts often contain seemingly innocuous “boilerplate” provisions which can lead to disastrous results if you don not fully grasp their legal implications. For example, many contracts contain a “no oral modification” provision, which generally means that nothing that you orally agreed to is legally a part of the deal. When a contract does not contain language specific to your transaction, using a form contract can result in major discrepancies between what the parties believe they have agreed to and their actual, legal rights and obligations.
- Many form contracts prohibit parties from filing a lawsuit in court in the event of a dispute over the agreement, instead requiring the parties to submit to binding arbitration. Sometimes it makes sense to agree to arbitration, but other times it can be to a party’s disadvantage. Further, such arbitration clauses should be carefully drafted to ensure they comply with the law and provide enough specificity to avoid creating additional disputes.
- Form contracts rarely take into account local and State laws and regulations. Failure to address these laws can be particularly problematic in certain kinds of agreements, such as employment, franchise, and construction agreements.
- Form contracts found online are often poorly drafted and contain internal inconsistencies. Contract provisions that are inconsistent or ambiguous can lead to time consuming and costly legal disputes, disputes which could have been avoided if an experienced business attorney reviewed the contract before it was signed.
Before you use a form contract that you find on the internet, have an experienced business attorney take a look at it. Doing so can help you minimize legal risk, protect your business interests and assets, and save you headaches in the future.
DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.