March 9, 2022
Contract law is fascinating.
Of course, it’s less interesting if, like me (a paralegal at the time of writing), you’re having to trawl your way through a 50-page framework agreement 'till your eyes begin to burn - but for those not bogged down in the details, they are!
We enter legally binding contracts several times a day, often without realising, mostly without them even being written down. Now you really think I’m mad, but it’s true – as is the fact that UK judges don’t bang a gavel…
Most business hate all the work that goes into contracts; the drafting, negotiation, formalities etc. But, of course, you want to have a good, favourable contract in place with other businesses, so you must put in the time. Time (notoriously) is money. Legal fees can creep up with the hours it takes to finalise a draft of a contract.
A way that a business can get around these hurdles is through turning to contract templates on the internet. With just a few choice words entered into Google, one can find a template of just about any contract that the heart desires. Many of them for a low price or even free. It took me under 20 seconds to find a template contract to sell my soul, and you bet it was free!
Here are 3 myths about online contract templates:
This blog is going to explore these three ideas and see if they are credible. At the same time, we will ask ourselves, what would make them better?
1. They’re cheap
Quite often the first thing we think of when we instruct a lawyer to create us a contract is “how much will this cost?” Having a lawyer draft you a contract can be a bit pricey; especially if they bill by the hour, they don’t understand your business and they want to query every issue. If you are looking to save cash, then it’s understandable why you might reach the conclusion that templates are the way forward.
However, online templates carry a large degree of risk. Let’s say the free template you downloaded contains several flaws. Perhaps it doesn’t stipulate which party owns what piece of intellectual property. What if it doesn’t provide any remedy if your customer delays (like liquidated damages)? What if there is a clause that allows your customer to terminate the contract whenever they want? What if the contract jurisdiction is Alaska? Better pack warm if you need to take the other party to court!
Without the right wording to protect you in these situations, your template contract could lead to confusion, more negotiation, potential litigation, and ultimately drafting a new contract. Before you know it, you’re back to having to pay for a lawyer fix the mess! That template that you bought for pennies might go on to cost you unavoidable legal fees, damage your reputation and leave you in a sticky situation.
2. They cut down time
The last thing you want is something slowing down your sales cycle. Drafting contracts often requires a lot of back and forth between you and your lawyer. It can be time consuming, quite dull, and most sales staff would much rather be winning contracts rather than dealing with drafting.
Let’s imagine it takes a lawyer one month to draft you a contract. That’s one month from first meeting, through to drafting, amending, then personalising and finalising. It makes sense that you might think it a no-brainer to save that month and buy an online template off the shelf.
But, as discussed before, you put yourself, your deal and your business at risk. Fundamental flaws in the contract could lead to massive delays. If the template isn’t quite right, you can spend a lot longer than a month trying to fix any mistakes to create a contract that works for you.
3. They can be just as good as one drafted by a lawyer.
This is plausible. Though most of the online templates have a disclaimer stating that they are not law firms, in all likelihood the templates will have been reviewed by a lawyer before they are released for sale.
However, online templates lack a ‘bespoke’ touch that can be crucial for businesses; online templates have not been designed for your specific purposes or commercial needs. There’s a huge amount of scope for error or discrepancy in terms of what the templates say and what you’re actually providing. It’s like going to a job interview wearing a suit borrowed from a friend – two sizes too big with a mismatched shirt. It’ll do, but something tailored would be much more effective.
Can we make templates better? Yes we can!
Like the best inventors we strive to constantly challenge, innovate, and improve. At Law 365, we constantly look at issues that impact our clients and ask, “how can we make it better?”
Templates could be the way forward, but a generic template poses a lot of risk. They could be cost-effective, speedy and competent, but currently that doesn’t seem to be the case.
Is it fair that small to medium businesses may feel forced to turn to incompetent contract templates because they can’t afford high legal fees? We don’t think so…
Law 365 will use AI to give you access to simple but effective legal contracts
At Law 365, we are trying to democratise access to simple legal contracts. We’re currently developing contract templates specifically designed for Microsoft Partners. We’re using our unique knowledge and experience to create templates that do reduce costs, that do speed up sales cycles, and that are drafted by real lawyers.
Not only that, but we also want to teach Microsoft Partners how to master these templates so their businesses can grow. Our templates will come with how-to guides to take you step by step through the contract. We will provide you with commentary to help you negotiate the finer commercial details with your customers, giving you the tools of a real lawyer.