The Importance of Responsible Contract Drafting and Review for the Small Business Owner

Business attorneys often hear some version of the following confession from their clients, “Oh I just used a contract template that I found online.” Statements like this evoke mixed emotions because (i) there is no such thing as “one size fits all” in the world of business contracts–each business transaction or relationship has its own unique set of facts and circumstances that should be considered when drafting an agreement so anyone who blindly relies on a generic form downloaded from the Internet does so at great peril, and (ii) from an economic perspective, it is always more profitable for a contract lawyer to review and rewrite a poorly drafted contract than it is to draft one properly from scratch.

People who refer to “standard contract provisions” often do not know what they are talking about or are trying to bluff their way through a negotiation. Most business contracts include a number of provisions that trigger warning sirens in my head and should never be considered “standard.” Indemnification, limitations of liability, liquidated damages, and disclaimer of warranty clauses can have disastrous effects on an unsuspecting party who does not pay attention to what he or she is signing. If you ever have the misfortune of being embroiled in a breach of contract lawsuit—and if you are fortunate to stay in business long enough, odds are that you’ll find yourself in court at some point, you may learn that the outcome of your case, and perhaps the future of your company, may very well hinge on the inclusion of one word in the contract.

Contracts can be short and simple and they can also be deceivingly complicated. In any event, small business owners should seek professional legal advice when drafting or reviewing a contract to ensure that the language used (i) accurately reflects the substance of the parties’ agreement, (ii) is drafted in a manner that you can easily understand your rights and obligations, and (iii) protects you to the greatest extent possible under the circumstances. Contract templates and forms found online cannot possibly take into account the specifics of your particular situation. Blindly relying on generic online templates might provide a false sense of security in the short run, but ultimately may prove to do more harm than good if questions or controversy emerge down the road. Technology is a valuable resource when used properly, but it simply cannot replace the professional advice that an experienced small business attorney can provide.

I have been helping small business owners and nonprofit organizations draft and review contracts of all shapes and sizes for over twenty years. Reach out anytime by phone, email, or through social media (LinkedIn, Facebook, Twitter, or the Perkins Law channel on YouTube) if I can help memorialize your next business transaction or key business relationship through a written agreement.

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