More and more individuals are resorting to standard form contracts found online or with software programs for use in their individual and commercial endeavors. They’re cheap, quick, and easy. What is important to realize, though, is that while these contracts are seemingly a “quick fix” to a problem, they can often cause more problems than they’re worth. These standard form contracts are often drafted to be one size fits all, but it’s often the case that it doesn’t fit at all.
For one, contracts are frequently drafted with the specific needs of particular parties in mind. Using a contract found off of google rarely accounts for all of the particularities and desires of contracting parties. Moreover, when contracts have provisions present which neither party understands, and the contractual relationship ends in a breach or problem, then the “quick fix” of using a standard form contract is lost. While you save money using a standard form contract, you end up paying a lot more in the end when it comes time to litigate or argue about the meaning or validity of the contract.
Every word counts in contracts. Words often denote special legal relationships or “triggers.” The term “accord and satisfaction” is a seemingly innocuous phrase that appears in discharge contracts. Though simple, it has the operative effective of completely resolving and releasing a disputed debt. Fancy terms such as “merger clause,” “force majuere,” “parol evidence,” “assignment,” “novation,” “contribution,” and “indemnification” often litter contracts. And aside from these legal terms of art, problems often arise with vagueness and ambiguity in contracts that are not worded and constructed properly.
As an example of the foregoing, I ran into a client not too long ago who used a standard form contract for an employment contract. He, as the employer, signed the employee with the contract. Big problems arose when several of the key provisions in the contract were not properly defined — and the contract prohibited the use of parol evidence (oral/extrinsic evidence about what a contract means). While there was eventually a solution to this problem, it’s a good example of how blanket contracts can result in more thing than you realize.
Lastly, standard form contract do not come with legal guidance explaining to you what exactly every provision means, nor do they have a knowledge of a given State’s case law interpreting the use and implementation of certain contractual provisions.
Although there is definitely a place in the world for the use of one size fits all contract, tread carefully. Whether it is the creation of a contract, the winding-up of a contractual relationship, or concerns over breach of contract, be certain to consult individuals who have experience dealing with contracts.