Legal templates seem like a convenient shortcut for busy entrepreneurs and small business owners. However, before you download a legal template, we urge you to consider the legal risks that come from relying solely on these generic forms.
Here’s why a one-size-fits-all approach may not be the best strategy for protecting your interests.
Lack of specificity:
Think about it: legal templates are meant to be basic and generic enough so that just about anyone can use them by copying and pasting. They are meant to appeal to the greatest number of potential customers. But this also means that they are not custom and specific enough to be truly helpful for any particular person.
The risks associated with every business are unique. The problem with legal templates is that they may not apply to your situation. This essentially makes them useless. Would you rather pay for something custom that actually does what it is supposed to do? Or would you rather get something for cheap that gives you nothing but a false sense of security?
Poor implementation:
Did you know that just because a contract is signed doesn’t mean it will be enforced? For example, when it comes to waivers, how you present it really matters. A court once refused to enforce a waiver because the waiver was placed on the back of a sign-up roster. Unfortunately, a template will not advise you on how to actually use it in a way that works with your local laws.
Also, just because someone signed an independent contractor agreement doesn’t mean that a court or the CRA will actually view that person as an independent contractor. They will still apply a complicated legal test to make that determination. A template cannot help you with that, but a lawyer can.
Inadequate protection:
Since templates are designed for general use, they likely will not capture the nuanced details that are crucial to your business or agreement. Proper legal documents reflect your situation and intentions accurately. This means that legal templates may not give you the level of protection that you need. Remember that at the end of the day, you get what you pay for. You can’t deny that a suit bought off-the-rack looks different from a tailor-made suit. A lawyer can tell instantly if a contract was bought “off-the-rack.”
Legal professionals consider a multitude of factors when crafting documents to ensure that their client’s specific interests are protected. We pay attention to the exact parties that should be included, the laws of the particular jurisdiction, and what legal remedies actually make sense for a given situation.
Here are some common mistakes that businesses make with legal templates.
Using invalid templates or terms:
Using templates obtained from unreliable sources or without legal review can lead to invalid or unenforceable contracts. This exposes businesses to legal risks and financial losses. If a legal document template is not appropriate for the intended purpose or is missing essential terms, it may be invalid or unenforceable. If one term is wrong, then the whole contract may be deemed invalid.
Inputting incorrect party names:
The names of parties need to be 100% accurate and complete. This is known as “privity of contract.” While it seems simple enough to write down the correct name, it’s not always done right. For example, we’ve seen some documents where an incorporation number was used rather than the legal name of the corporation. We’ve also seen one too many typos.
Misinterpretation of terms:
Legal language is complex. Using the wrong words can result in unclear or ambiguous terms that may be interpreted differently by different parties. This leads to confusion and unnecessary disputes. Every single clause or term in a contract has legal implications attached. To an untrained eye, it may look straightforward, but certain words have huge repercussions. That’s why legal professionals often spend a lot of time defining each term perfectly.
Failing to regularly review and update:
Failing to review and update legal document templates regularly can result in errors, omissions, or outdated terms. Legal requirements and regulations change frequently, and using outdated templates can result in non-compliance, legal disputes, and financial losses.
Here’s a short case study:
A small business owner downloaded a generic commercial lease template online without seeking legal advice. The template saved him time and money. However, it lacked specific clauses dealing with maintenance and dispute resolution.
When unexpected plumbing issues damaged his inventory, he asked his landlord to make repairs. Unfortunately, the landlord refused and blamed it on the vague language in the lease. At this point, the small business owner had no choice but to seek legal advice. He had to incur the additional expense of hiring a lawyer and negotiating a separate agreement for repairs. While this was being sorted out, no repairs were made and his business took a hit.
This experience highlighted the importance of seeking legal advice from the start to ensure comprehensive protection in commercial transactions. The seemingly cost-effective route of using a legal template ended up costing more in legal fees, damages, and precious time than the initial savings.
In conclusion, having your contracts drafted by a lawyer can save you and your business money in the long run. This investment can prevent costly legal disputes and financial losses in the future. It also conveys professionalism and credibility to clients, partners, and investors. In other words, it shows you mean business.
If you’ve read this far but you’re still adamant on using a legal template, then our advice to you is this. At least have it be reviewed by a legal professional. A legal professional can tailor it to your specific needs and ensure that it can be enforced in your local jurisdiction.
