(No) Fun with Cookie Cutter Contracts

You just brought in a new client. You know you should send them a contract to look over and sign; you’ve read that oral contracts are a bad idea. It turns out your client read the same post, and emails you asking for you to send your contract right away. Your pulse quickens, “But… but… but… I don’t have a contract” you think to yourself. “And lawyers are so expensive and hard to work with.” (By the way, not true). Sweat forms on your brow. In your panic, a brilliant idea hits. “I bet I can find a free contract online”. You quickly do a web search and eureka, there it is for the taking. You give it a quick read and then, in an inspired moment, you remember a friend of yours was in a similar situation last year. You quickly call so you can “borrow” his contract and swap out the names. Now you’re cooking. Or are you?

richmond-business-lawyerWhatever you call them free contracts, sample contracts, form contracts, or contract templates, these Cookie Cutter Contracts are like one size fits all shoes; if they try to fit everyone, then they don’t fit anyone. Cookie Cutter Contracts found online or those used in colleagues’ transactions are not advisable to use in your business because they are not tailored to your needs. Your situation is undoubtedly different from the situation covered in the contract sample you found.

  • Perhaps you just found an agreement online and decided to use it. Unknowingly, you may have just grabbed an agreement that was written by someone on the opposite side of the transaction from you. You have now unintentionally used a contract where every term is slanted in favor someone in the same shoes as the party you’re contracting with, not you. You may now be stuck with unfavorable payment terms, intellectual property rights assignments and transfers you would never have wanted to give, one sided termination clauses, and a host of other very regrettable terms.
  • Perhaps you have cut and pasted the Terms & Conditions from a major online retailer’s or social media website. Unknowingly, you may have just implemented an intellectual property policy or data collection policy that your customers may be furious with. You also may have made your website governed by the law of a state that you are not in. You also may have agreed to provide services you don’t know how to or intend to perform or implemented a return policy you can’t follow.
  • Perhaps you have borrowed a contract that a colleague used last year in a similar situation. Unknowingly, you may have just agreed to terms your colleague accepted because he was not as skilled a negotiator as you, had inferior bargaining power, didn’t think about his legal rights and responsibilities, or used free contract he found online.

These off the rack agreements can be dangerous because, as they are written with someone else’s needs in mind, they almost certainly have provisions you don’t need, don’t want and likely include terms you don’t completely understand. By using these forms you may be agreeing to things you did not intend to or making concessions that you did not need to make. Viewed in this light, using a form contract could be riskier than using no contract at all.

The better move is to push Cookie Cutter Contracts aside and use something prepared with your specific wants, needs, risks determinations, and goals in mind. Preparing a strong contract is an investment in your business because it helps you achieve goals and eliminate risk. Don’t use the Cookie Cutter Contract. Make one that accomplishes your goals.

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© Christopher Way 2017