When it comes to business contracts, agreements and/or policies, they may all appear to be redundantly similar — at least to the untrained eye. And because many seem to be alike, many business owners assume that they don’t need legal expertise in drafting these essential legal documents and can instead take a one-size-fits-all approach. But as a business owner, using the do-it-yourself method to legal documents is a risky route.
The hundreds of contract and agreement samples and templates found online, which can be downloaded by businesses, will likely not offer provisions or customized language specific to your business or your business’s needs. Nor will contracts drafted for friends or prior businesses and employers. So while this solution appears to be an easy way to sidestep the legal fees involved in drafting these important documents, it’s not.
Even if the agreement or policy appears to have been drafted for a similar business or purpose, without a careful review by someone familiar with the facts relating to the original purpose, it is risky to rely on a policy or agreement that had originally been written for another business entity. That’s because the details in a specific contract are necessary in that contract but may not be in another. A precedent contract may be well drafted but it was not drafted to meet a specific need and situation — it may have been written to meet a different need in a different situation. It likely contains crucial terminology or clauses specific to the situation it was referencing. A necessary provision may be missing; worse yet, a provision, which was a benefit in the original contract, could result in unintended, harmful consequences in another context. An omission or oversight may nullify your contract, resulting in anything from a corporate headache to a fine.
For example, a contract between a business and a consultant may include a clause stating who owns the rights to the completed work. The answer to that would likely be negotiated and included in great detail or excluded from the contract. Such a clause may have to have been excluded from the contract you’re relying on for a good reason — but may be necessary in your relationship with the consultant.
Another consequence of using precedent contracts for your own business purposes is that laws, and specific language around them, differ from province to province, and most definitely from country to country. An employment agreement drafted in New York State, for example, would contain language and clauses that are inapplicable and unenforceable in Ontario.
Only a lawyer who comprehends the complexities of the law can draft an agreement that is appropriate for your business. A precedent contract, policy or agreement can be used as a starting point and referenced but cannot act as a substitute for thinking through what’s required.