Should I Use a Form Contract I Find on the Internet?

We have previously addressed common contract issues people have brought to us (here, here, here, and here.)  People often come to us wondering whether a form contract they have discovered somewhere in the nether regions of the internet will “work” to arrange their business affairs and satisfy their legal needs.  Form contracts can be very good or very bad–and the very bad inevitably lead to messy, contentious, and difficult litigation.  We know–we have seen it first hand.

Here are a few reasons why you should not rely on form contracts you find on the internet.

There is No Such Thing as a Standard Contract

People often think that there is a standard contract that exists for a particular task, like a contract to prohibit an employee from competing with an employer for a period of time after employment.  This misconception leads people to believe that a form agreement found online is sufficient to suit their business needs.  Of course, no contract is “standard.”  While lawyers usually begin from a “template” when drafting a contract for a client, this is for the sake of efficiency and to make sure lessons-learned become a part of future contracts.  A lawyer will draft a contract after a careful discussion with a client about the client’s goals and particular circumstances.  A form contract will not consider the specifics of the situation, except by blind luck.

Contracts Get Outdated

Contracts require periodic review.  A business’s goals may change, or the law governing the enforceability of a particular clause may have recently changed due to a new statute or court case.  A contract should reflect the realities of the agreement in the real world.  On occasion, parties may say one thing in a contract, but through a course of conduct end up doing something completely different that both parties find acceptable, but which may constitute a breach of the previously written contract.  A lawyer also knows that a contract must consider the relevant statutes and cases that govern it, and that on occasion, those things change.  Unfortunately, choosing to use a contract discovered on the internet is not conducive to these considerations.

Contract Law is Different in Different States

Although contract law is basically the same throughout the United States, there are variations from state to state that might impact the enforceability of a contract.  For instance, in Virginia a non-compete agreement (which we previously discussed here) is generally enforceable, although subject to certain limitations.  In contrast, in California a non-compete agreement is practically unenforceable, except in the case of certain transactions relating to the purchase or sale of a business.  If you’re using a form contract from the internet, you have no idea what state it was written for–or if it was written with any specific state in mind at all.

It Might “Work”…But it May Be Missing Something

When you find a form contract through a Google search, it’s never really clear how good it is and if it anticipates all of the issues that could arise.  For instance, a form contract could have good language setting out the general obligations of the parties, but fail to describe what happens in the event of a breach.  A contract could provide clear guidance on when a breach occurs, but fail to adequately address issues that could arise in litigation, like what law will apply and whether the prevailing party will obtain attorneys’ fees.  These are the kinds of infirmities from which form contracts can suffer, which is why it is important for a business to have a lawyer draft a contract and advise on its use.