Should I Use An Online Simple Contract?
I want to talk about a question that we sometimes receive, which is can I, as a business owner, trust an online template agreement for my business? In other words, is it better for me to write my own agreement using an online service, or is it better for me to have an attorney prepare the agreement or at least review the agreement? That’s a great question. We see a lot of situations where people have created their own agreements using an online form — and things have gone wrong. Examples include an agreement that wasn’t in the name of the business, so the business owner got sued personally. Another example of an agreement that went wrong because it didn’t get reviewed is an agreement that automatically renewed without the business owner realizing it. Another situation we’ve seen is an agreement with non-competition language that doesn’t make any sense. We have also seen messed-up promissory notes prepared on the internet. I would like to discuss four reasons why you really want to have your agreements prepared or reviewed by an attorney rather than trying to cook up a form from the internet. First, even though the face dollar amount of a contract may be relatively low, the potential liability oftentimes exceeds that. So if something goes wrong, it’ll cost you more than you received under the agreement. Examples of that include service interruptions or delays or impossibility, something we’ve seen a lot with COVID. Other examples include promises that end up costing a lot of money to perform. Second, the attorney will see things that you don’t see. And I don’t mean that to be insulting. For example, when I go to the dentist, they look at my teeth and can tell me a story about what’s been happening to my teeth for the last 30 years, just because they can read every line or crevice on the teeth. When I go to my doctor and have them look at my ankle, they can speak volumes about what’s happening. When I go to the bike shop and have a mechanic look at my bicycle, they know where I’ve been riding, what I’ve been doing, and that I’ve been using my rear brakes too much. It’s just because of their experience in that specialized area. They just see things that are not visible to me as a layman. And it’s the same way with an attorney and a contract. You read a contract, you see some things. When the attorney reads the contract, they see a lot. And one of the things that they see are pitfalls — things that can go wrong and things where you could be in real trouble if not addressed. Another thing that they’ll see is opportunities, things that you can do to really improve your leverage in the deal. A third reason for having an attorney prepare or review your agreement, as opposed to using an online service, is that the attorney can customize the agreement to your company’s needs, situation, and even location. And believe it or not, where you do business will matter in terms of which laws will apply to your business.
Oftentimes with an online form, you may believe you need a specific type of agreement when in reality you need a totally different one. And so by going online, you’ve created a square peg that you’re trying to fit into a round hole. And from the very get-go, it was just the wrong type of agreement for your situation. Reason number four for having your contract reviewed by an attorney is that it’s a great way to start a relationship with an attorney. You can sort of test drive that person. You’ve got this agreement to be prepared or looked over. It won’t cost you a fortune. But the process of meeting an attorney and seeing how they do, and seeing how things click between you and the attorney, will pay big dividends. Later, when you have a question come up, instead of wondering what the answer to the question is, you can pick up the phone and call your attorney. And you’ve got someone who knows who you are — and who will be available to answer the phone. Over the long haul, if you’re having all of your business agreements prepared and reviewed by an attorney, that is the best way to use your money. You’ll save because of the investment you made to get the agreements done right, by a professional. If you avoid one legal problem down the road, the amount you save will exceed the amount you invest in preparing your contract professionally. Entering into a contract is a serious act and should be treated seriously by you as a professional, just like everything else you do in your business is serious business. If you have any questions about the process for reviewing a contract or the advantages of having your contract reviewed by an experienced business attorney, give us a call.
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