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!
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!
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