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Legal Landmines: Is that contract you found online leaving your company vulnerable?

Last week I was enjoying a wonderful dinner with close friends when I heard one of the most anxiety inducing comments an attorney who drafts and negotiates contracts can hear: “I used a contract template that I pulled off the internet.” I can’t tell you how many times I have heard this phrase in my legal career; not only from social acquaintances but also from clients. Each time it evokes the same feeling of concern for the individual who is hoping to rely on any protections under that agreement or to enforce contractual obligations. There is no “one size fits all” in the contract world as each circumstance has its own set of facts that must be considered when drafting an agreement.

Confessions to utilizing online templates tend to be followed by the assertion that the contract is made up of all “standard terms,” so seeking further advice seemed unnecessary. Most commercial contracts have sections that trigger alarm bells for me when I review and which should never be considered “standard.” For example, indemnification, limitations of liability and disclaimer of warranty clauses can have disastrous effects, if not properly drafted. I had a former colleague who referred to the limitation of liability section as the “company killer clause.” Litigations have hinged on the inclusion of one word in the contract. If the fate of your company rests on one paragraph or even one word, is it worth simply using a one-size-fits-all internet contract?

Contracts can be deceivingly complicated and sometimes the ease of a quick internet search can be all too alluring. However, it is important to seek legal advice when drafting a contract to ensure that the contractual language meets the needs of its intended purpose. The contract templates found on the internet cannot take into account all the nuances of your particular situation. Relying on such a contract could leave those looking for protection in the margins of their agreement unexpectedly vulnerable. Technology and the internet are great resources if used correctly but they cannot replace professional input and guidance.

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