Contracts are the rule books of business relationships. The rules are not always followed so it’s not uncommon for contractual disputes to go before a judge. Contracts are great tools because a bulk of the time everyone follows the terms. More and more contract drafters are getting away from documents that are filled with legalese that will force you to pull out a dictionary just to figure out the basics. With these plain language agreements that allow everyone to read and understand contracts, what’s the point of having an attorney review an agreement for you?
Even the simplest contracts can be complex and riddled with issues. Not everything you need to be aware of is going to be in the document you are reading. In fact some of the most important terms that you need to be aware of will be the ones that don’t appear in the agreement at all. A business lawyer’s review of a contract is more than just understanding what the agreement contains but what the agreement should contain.
One-sided protective clauses, no terms regarding timing of the contract, and vague terms are just a few of the many things that while not noticeable in a cursory reading of a contract can be issues down the road.
I had a client that had hired a contractor to do some work on his house. The agreement that was executed stated that the work came with a 15-year warranty. There was a term in the agreement that warranty work would not be covered by the warranty. The issue arose when the work was complete and some of the work was defective. Under the terms of the agreement the contractor would repair the work but those repairs would not be part of the 15-year warranty. There was no term in the agreement stating that the contractor was responsible for defective work and such repair would not affect the warranty.
Often times these absent terms or vague terms are referred to as loop holes in the contract. In the example above, the contractor had a loop hole to get out of ensuring his work for 15 years by simply doing a poor job at the start, coming in and repairing the work, and thus terminating the warranty. While I cannot say whether that was intentional on his part or not, it was an issue for my client. Luckily we were able to settle the matter and another contractor did the corrective work and warranted it too.
This agreement was not unique. There are people using agreements that they found on the internet (or even paid for from a document service) or that they think are good enough because they have the important terms contained in their wording. All of these have potential issues that can leave you and your small business vulnerable. Paying a contracts attorney to review you agreements will save you money down the road. While you might have escaped before with no issues, the chances are that eventually something will come up. How much is avoiding thousands of dollars in litigation costs worth to you and your business?
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