The Risk of Contract Templates

Starting a business is expensive, time consuming, and can easily get overwhelming.

The good thing is a quick Google search leads you to dozens of websites that will incorporate your business, and hundreds of templated contracts you can use.

The easiest thing to do of course is use one of these web based services to incorporate and get stock documentation, and fill in the blanks on templated contracts and hope for the best. Honestly, they are a good resource to start with.

However, if you ask an attorney, check Avvo questions, or simply search civil litigation cases in your local court system – chances are you’ll find that contract disputes are some of the most common cases.

Why? Because a lot of small businesses and freelancers are using templates they found online that are not specifically written for their business and overlook key provisions that should be in place to protect them. Examples I’ve personally seen include:

  • A photographer/videographer unable to collect payment because their contract did not specify a warranty;
  • Consultants being refused payment despite their clients making material changes to the original engagement;
  • DJ’s not being paid for their services because they did not specify what equipment will be needed;
  • Event venue’s being sued because of a double-booking fiasco for events.

This isn’t isn’t just a small business or service provider thing. Tech startups are also exposed. Examples I’ve personally seen include:

  • Startups using templates for key contracts at incorporation – such as Shareholders Agreements, IP Assignment, and Corporate Bylaws – being refused funding by reputable venture capitalists, or required to redraft these documents due to ambiguities.
  • Startups using boilerplate Terms of Service, Service Level Agreements, and Purchase Orders faced with insolvent customers that find loopholes, or shaky customers that outright violate their Terms of Service leaving the startup open to liability.

So – how does a startup, small business, or freelancer on a budget go about making sure they’re protected?

You can find a startup or small business friendly attorney in the first place to draft all of your contracts from incorporation onwards and make re-usable templates for you. Small firm or Solo practice attorneys are best for this – because they don’t have the overhead costs to forward to you.

Startup or small business friendly attorneys can also do an audit of your current contracts, agreements, and policies to make sure they’re all in line protecting you and are VC/third party friendly. This way you can keep your templates, but still identify gaps and fix what should be fixed.

Let us Help

Kader Law offers both drafting specific agreements for your company, and doing audits of existing contracts. We can help from forming your corporation, to drafting shareholder agreements and bylaws, to terms of service and service level agreements that look after your best interest. Contact us today and tell us how we can help you.

This post is not legal advice, and does not establish any attorney client privilege between Law Office of K.S. Kader, PLLC and you, the reader.