Why Opting for a DIY Contract Could Cost You More in the Long Run
Think a DIY contract will save you time and money? It might – until a small oversight turns into a costly legal headache. Imagine a single clause costing you thousands or putting your business on hold. Contracts are the backbone of any business relationship, but a ‘one-size-fits-all’ approach often falls short, leaving you vulnerable to hidden risks.
So, is the quick fix really worth the risk?
We understand the allure of these contracts. They’re a convenient, cost-effective way to get a contract quickly and easily. But before choosing this convenient option, consider the significant risk you expose yourself. The legal consequences can jeopardize your business and flush away your hard work.
Do DIY Contracts Save You Money?
The appeal of DIY contracts lies in the perceived cost savings. Using free or low-cost templates allows you to draft agreements without legal fees. However, having a lawyer draft and review your agreement is an investment in your business, not a cost. Most entrepreneurs lack the legal expertise needed to create effective contracts. It is easy to overlook the critical clauses that protect a business’s interests without properly understanding the legal terms and implications.
Consider a software company that hires an independent consultant to develop proprietary software. Using a DIY contract template, they fail to include a clause clarifying intellectual property ownership. When the consultant finishes the project, they claim ownership of the code, believing they can resell it to other clients. The software company now has to negotiate or take legal action to resolve the dispute, potentially losing thousands in legal fees and putting the business’s operations on hold.
How Comprehensive Is a DIY Contract?
Another problem with DIY templates is that they are generic and may not cover all necessary terms relevant to your situation, leaving gaps in protection. Take for example an employee contract template found online. The types of clauses in an employment contract for a software developer are not the same as the ones a restaurant owner needs to hire waitstaff.
Oftentimes these DIY contracts contain ambiguous terms which can lead to misunderstandings, resulting in disputes that could have been avoided. Imagine a small restaurant that uses a DIY contract template to hire waitstaff. The contract lacks clarity on overtime pay, tips distribution, and termination conditions. When an employee challenges their termination and claims they are owed unpaid overtime, the restaurant faces potential penalties and legal costs due to inadequate protection in the DIY contract. By contrast, a lawyer could have crafted an employment agreement tailored to the restaurant’s specific needs, covering essential details and ensuring compliance with local labour laws.
Further, it is important to remember that under Quebec’s contract interpretation rules, in case of doubt, a contract is interpreted against the person who drafted it and in favour of the person who contracted the obligation. In the case of a contract of adherence or a consumer contract, it is always interpreted in their favour. As a business owner implementing contracts for your business, it’s important to ensure they are specific to your needs and drafted to avoid ambiguity being held against you in court.
Why Should I Retain a Lawyer For My Business Contracts?
Retaining a lawyer to draft your contracts offers several advantages. A legal professional can create tailored agreements that address your unique needs. We can identify potential risks, ensuring you navigate complex legal issues effectively. A well-drafted contract is clear and precise, eliminating ambiguity and protecting both parties' interests. Furthermore, we ensure that your contracts comply with relevant laws, reducing the likelihood of disputes.
Consider a digital marketing agency that signs a DIY contract with a client for social media management services. The contract vaguely states that they will provide “monthly social media content.” Without details on the scope, frequency, or types of content, the client could demand more work than initially anticipated. When the agency refuses, the client threatens legal action, potentially costing the agency both money and reputation. With a lawyer’s guidance, the agency could have created a specific scope of work to avoid such misunderstandings.
Whether you’re hiring your first employee, closing a deal, or working on establishing partnerships, investing in lawyer-drafted contracts is an essential step. Such a contract will not only state the terms of the engagement but also consider termination. Who will be allowed to end the contractual relationship, how much notice is required, and how will they give this notice? What happens when a party breaches their obligations? Can either party sue, or is there mandatory arbitration? These potential issues (and more) will be considered in a comprehensive contract.
Let’s say a tech startup creates an innovative software solution. If they hire a developer without clear IP clauses in the contract, the developer might have grounds to claim co-ownership of the software. This could limit the startup’s control over its product. By working with a lawyer, the startup can have an airtight IP clause, ensuring full ownership of the software and preventing future disputes.
Are There Any Benefits to a DIY Contract?
Consulting a contract template online can have some benefits. It can help you think through the types of clauses you would like to include in your agreement. For a business owner just starting, reviewing a DIY contract template for an independent contractor might introduce terms like “indemnity” or “exclusivity.” This basic understanding can streamline the consultation with a lawyer, allowing for a more efficient and tailored contract draft. However, relying solely on the template without legal input can leave you exposed to risks and gaps.
By doing some research ahead of time, and thinking through the types of clauses, you will have a more productive consultation with your lawyer. Consultations with our firm always start with taking the time to understand your business, your current operations, and your future plans to ensure we can provide you with relevant and actionable advice.
What Should I Do If I Need a Contract?
In summary, while DIY contracts may seem like a cost-effective solution, they can lead to costly legal problems down the line. Seeking professional legal assistance ensures your contracts are properly drafted, tailored to your needs, and enforceable.
Imagine an e-commerce brand partnering with a fulfillment center to handle orders. Without a clear contract, issues like inventory loss or delayed deliveries could damage the brand’s reputation. However, with a lawyer’s help, the brand includes accountability clauses in the contract, requiring the fulfillment center to meet specific performance metrics. This attention to detail enables the brand to grow confidently, knowing its logistics are secured.
If you’re entering into a contract or have existing agreements that need review, reach out for a consultation. At Astre Legal, we’re here to help you navigate contract law and protect your business interests.
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