Skip to main content

The BUSKLAW November Newsletter: The Perils of DIY Contract Drafting


Do you need a contract for your business? What if you don't have a lawyer to call for that? Do you jump on the Web, go to the first DIY legal site that Google brings up, select a form that sounds right, download it for a fee, fill in the blanks, and hope for the best? Or do you find an old contract that your lawyer drafted for a similar deal and just change the parties' names, the date, the business information, and send it to the other side for signature? 

 Congratulations! You went the "instantly create a contract" route! Who needs a lawyer when you already have a contract form that seems OK? You saved your company money that can now be put into the office Christmas party fund. You aren't even a lawyer, but you're a smart cookie - C Suite material for certain. So don't be afraid to shop for an expensive toy - like that Tesla Model X with the handy bio-weapon defense mode.

 But don't sign that check to Tesla just yet. Instead, make sure that you have your resume up to date and a personal cash reserve, because your decision to use the cookie-cutter approach to contract drafting could cause a world of hurt.

 It's never a good idea to pick a form contract that may have worked for one transaction and use it for another without an attorney's careful review (and likely revision) of the contract for the new deal. Even if the business framework is similar for both transactions, there can be subtle (or not so subtle) legal or business differences that call for revisions to the contract. For example:

  • There have been court decisions or changes in federal, state, or local laws or regulations since the first contract was signed that require changes in the contract for the new deal. 
  • The other side in the first contract was a Michigan resident, but the other side in the new contract is located in another state or country.
  • The other side in the first contract was a large, established company, but this customer is a newbie. 
  • The cost of the new deal is greater (or smaller) than the first one.
  • The subject matter of the transaction is different. For example, the first deal was for goods; this new deal is for services.
Even Donald Trump's lawyers (who should know better) can screw things up by using a contract from a previous transaction.

 And an area with great potential for cookie-cutter contract mischief is the misuse of non-disclosure agreements, including selecting a form that protects only one side's confidential information. That's what happened to the plaintiff in the case of Fail-Safe, LLC v. A.O. Smith Corp., 674 F.3d 889, 893-94 (7th Cir. 2012) (affirming summary judgment for defendant): The plaintiff's confidentiality agreement with the defendant protected only the defendant's information; consequently, the plaintiff's afterthought disclosures of its own confidential information were unprotected. (Thanks to Professor D.C. Toedt III for bringing this to my attention.)

 You may be handy enough to assemble a wine rack (I did this once and barely lived to tell the tale, as my Meijer coffee-break pals may recall) or even remodel your bathroom. But don't be fooled by thinking that you can safely re-purpose your contracts or grab a form contract from the Web that seems right without consulting an experienced lawyer. Trouble awaits those looking for a quick contractual fix! 
Labels:

Comments

Post a Comment

Popular posts from this blog

The BUSKLAW Halloween 2022 Post: Stephen King's Asides on Poor Writing in Fairy Tale

  Having just read  Stephen King's Fairy Tale in time for Halloween, it's appropriate to examine his asides on poor writing included in the book. (BTW, Fairy Tale is a good read with King's typical well-executed character development, plot, and a great finish to the story. But you have like the whole Grimm fairy tale genre before you read his take on it.)  Stephen King doesn't tolerate anything less than crisp prose. When the story's hero, Charlie Reade, tries to read a book about the origins of fantasy and its place in the world matrix ("what a mouthful"), he can only scan it because: It was everything I hated about what I thought of as "hoity-toity" academic writing, full of five-dollar words and tortured syntax. Maybe that's intellectual laziness on my part, but maybe not. Later on, Charlie tries to focus on a particular chapter in the "origins of fantasy" book about the story of Jack and the Beanstalk but is put off by "t...
Post a Comment
Read more

The BUSKLAW May Newsletter: The Foolhardy Practice of Using Faux Terms of Art in Your Contracts

  Most lawyers draft contracts. That's what lawyers do. And they use perceived terms of art ("TOAs") because they want to be paragons of contract-drafting precision. But here is where the canker gnaws:  the words that lawyers insert in their contracts as TOAs are actually not, potentially causing problems in clarity and interpretation. And as I've said time and again, these problems lead to disputes, and disputes lead to litigation, which is always time-consuming and expensive for the parties involved.  Let's first define TOAs in the legal context. According to Professor Bryan Garner in his Dictionary of Legal Usage , TOAs have specific, precise meanings that are "locked tight" and based on legal precedent. But then there are the faux TOAs, "whose meanings are often unhinged." Expert contract drafters, Garner says, know that clear, simple drafting is less subject to misinterpretation than using TOAs that are nothing more than "mere jargon....
Post a Comment
Read more

The BUSKLAW May Newsletter: Another Trump NDA Bites the Dust!

  In my August 2020 newsletter, we discussed lessons from the New York Supreme Court's rejection of the Trump family NDA. Drafting lesson #1 is the need to specifically describe the information covered by the NDA rather than vague references.  Unfortunately for Trump, this lesson wasn't learned, as evidenced by a recent New York U.S. District Court decision in the case of  J essica Denson v Donald J. Trump for President, Inc.   Plaintiff Denson was employed as a national phone bank administrator for the 2016 Trump campaign. Before she was hired, she signed the standard Trump employment contract containing broad non-disclosure and non-disparagement provisions. Confidential Information was defined as: ...all information (whether or not embodied in any media) of a private, proprietary or confidential nature or that Mr. Trump insists remain private or confidential, including, but not limited to, any information with respect to the personal life, political affairs, and/o...
Post a Comment
Read more