Most disputes we see come out of a contract. And many times, the dispute could have been avoided at the drafting stage.
Contracts are used every day by many different people. In fact, I would bet that most people sign a contract of some kind every week. Getting your car repaired? Having a minor medical procedure performed? Placing an order on Amazon? All of these involve contracts.
Some contracts are relatively standard. That doesn’t excuse you from following these simple rules to protect yourself from a later dispute:
- READ the contract.
“I didn’t know that was in there!” This does not excuse you from the contract term. People also fall into the trap of assuming that a contract works in a certain way. I see this often with real estate contracts. People assume that earnest money automatically goes to the seller if the buyer walks away from the contract. Not so. There is nothing in the standard contract South Carolina realtors use that says this. But many people assume it’s there.
- Understand the contract.
Convoluted, legal language is not necessary. In fact, what is most important about a contract is that you know what it says. Contracts are designed to set out the rules and expectations of the parties’ relationship. If the parties cannot understand the rules, then the contract is useless. If you read it and do not understand it, ask questions!
- Ensure the written document matches your intent.
We always ask clients about their contract and what it is for. Then we review the written document. And many times, the document does not say what the client thinks it does. When we ask about it, they often reply, “Oh I talked with the other party and we agreed to X, Y, Z.” Guess what? This doesn’t count. Most contracts contain a “merger clause” which limits the agreement of the parties to only those provisions in the written document. Even without a merger clause, this is the default for contract interpretation. In other words, you will be held to what you sign, whether it says what you intended or not.
- Make sure all terms apply to you.
Standard contracts may have standard provisions that do not apply to your scenario. For example, before having a minor medical procedure, I reviewed the consent form and saw a paragraph about medical students or interns assisting. I asked the doctor’s office if this would be the case and they informed me that they do not even work with these students. So, I crossed out the provision and initialed next to it. Which leads to my next rule…
- Change the document if needed.
Even with standard documents, you can cross out or add terms. Do whatever you need to do to make sure the document is accurate.
For transactions that are not as standard, do not let yourself be forced into a standard contract. Believe it or not, there are few absolute requirements for drafting a contract. Many lawyers draft from go-by forms and hesitate to stray from the norm. But, for example, the considerations in the purchase of a business offering online trainings (primarily intellectual property) are very different from those in the purchase of a brick-and-mortar store (primarily physical assets). To ensure the right fit for your transaction, we recommend having your contract drafted from scratch. This allows the contract to be structured in a manner that fits the nature of your specific transaction. It also eliminates having inapplicable provisions lingering in your contract. (Ever seen those contracts that are 20 pages but only 2 seem to apply to you?)
So dare to be different! Demand better from your contracts.