The Dangers of DIY Contracts

Why Small Businesses Should Avoid DIY Contracts

Contracts are an essential component of effective business management and development. Savvy business owners recognize the value of contracts but often explore ways to reduce the cost of obtaining them. In some instances, business owners attempt to create their own contracts by using templates available online.  

However, creating your own contract is fraught with risks. What you do not know can, in fact, hurt you. The following are examples of the potential risks you face when you choose the do-it-yourself (DIY) route. 

1. The Contract May Leave Out Key Provisions. 

Creating your own contract in an attempt to save money can run the risk of unintentionally leaving out key legal terms and clauses that protect your interests as a business owner. DIY contracts created with online templates are often overly broad or vague, resulting in agreements that, when analyzed, fail to provide the specific protections that give the contract value. Attorneys have the experience and resources to craft contracts that include the most important provisions to protect your business. 

2. Your Contract Could Be Unenforceable.

Failure to understand the legal landscape can result in crafting DIY contracts that, when litigated in court, are found to be unenforceable. For example, specific laws vary by state. As a result, a contract that is appropriate in one state could fail in another. For instance, employment agreements with non-compete provisions may be enforceable in Texas but unenforceable in California. In this case, the unsuspecting individual who uses a Texas contract for an employment agreement in California could be left with, at a minimum, a clause that will be thrown out, or quite possibly an entire contract that is useless. 

Moreover, DIY contracts could become unenforceable because laws can change over time based on developing case law and legislative updates. Specific terms and language may need to be added, removed, or revised in order to maintain legal force. These changes are nuanced and tend to be overlooked when using DIY contracts, thereby resulting in an agreement based on laws that are outdated or inconsistent with your business’s jurisdiction. Finally, there is a wide variety of legal rules that describe and dictate the conditions that must exist in order for a contract to be deemed valid and enforceable. Failing to keep conditions regarding enforceability in mind can result in documents that look right but hold no legal weight.  

3. You Could Create an Accidental Legal Obligation.

Contract drafting involves very deliberate language. The inclusion or exclusion of various terms can unintentionally create legal obligations and make your business legally liable. This is especially true given the complexity of boilerplate language often found in contract templates. The details hidden within boilerplate language may create obligations that you are not legally required to take on.  

These various risks could culminate in increased liability, decreased protection, and expensive legal fees to remedy these mistakes. The limited savings of DIY contracts are easily outweighed by the time and money that will be spent if any of these risks become reality in your business. As the well-known adage goes, “Prevention is better than cure.” 

We understand the challenges businesses face and can assist you in obtaining contracts that protect your interests. When you schedule an appointment with us, you can rest assured that you are working with dedicated professionals invested in helping you and your business succeed. Call (727) 279-5037 or visit us online today.

Content repurposed with minor changes with permission from Wealth Counsel.

Image by Andrea Piacquadio on Pexels.