Why Should My Business in the UK Avoid Copying Other Companies’ Contracts?

As a business owner, you often need to record arrangements with other companies within commercial contracts. It is usual practice for the business offering the service to provide a commercial agreement for signature, and many companies use tailor-made contracts.  However, at the moment, many organisations in the UK are looking to save money by any means necessary, and some are copying other companies’ contracts. Setting aside the inherent copyright infringement risks, copying another company’s contract can be detrimental to your commercial interests. This article will explore the risks involved in copying written contracts from other organisations and why doing so may cost your business more in the long run. 

What is a Commercial Contract?

A commercial agreement is a legally-binding contract that seeks to record a commercial deal between businesses. A good contract will accurately record the main terms between the parties and provide relevant detail regarding the: 

• goods and services;
• timeframe; and 
• payment terms.

Let us explore how copying other companies’ business contracts may weaken your commercial deals.

1. Contradictory Wording

One key mistake business owners make copying a contract from another legal entity is trying to amend it to suit their company. This is often a mistake because most efforts involve the business adding its own content to the original work but failing to delete existing provisions. Consequently, this often leads to a situation where the contract already addresses a particular issue, and the new business muddies the waters by addressing it differently.

For example, let us say that a small business obtains a signed contract from another company and decides to ‘re-use’ it. The existing legal document states that payment is due within 28 days, and the terms set up a rolling monthly contract for a specified number of items. However, the new company adds wording (on different pages) stating that payment is due within 14 days and that the deal is for a one-off sale and purchase.

Accordingly, there are now two different payment periods, creating confusion for the buying party (who will probably rely on the longer period).  Additionally, there will likely be uncertainty as to whether the goods are a one-time transaction or monthly. Moreover, since contract wording is legally binding on your company, such mistakes can prove very expensive.

2. Unsuitable Wording

To counter the above problem, some organisations simply change the names of the parties and little else. In this way, they try to keep the contract wording as similar as possible. While this may avoid the issue of contradictory wording, it may lead to the major problem of the contract not suiting that business.

Companies do business differently. Hence why commercial contracts differ between firms in the UK. For example, you can make two deals with different companies and receive two very different agreements even if the core service is similar. This is because those organisations will value alternative clauses within their business transactions.

So if, for example, a coffee bean business sought to ‘re-use’ a purchase contract from a manufacturing company, it would be wildly unsuitable. This is because the manufacturing purchase contract will contain much detailed information that does not apply to the coffee bean business.

Nevertheless, it is risky for the coffee bean business to delete irrelevant parts. Primarily this is because most commercial contracts are tightly drafted in terms of clause numbering and having specific clauses refer to other provisions. Therefore, any attempt to delete parts of the contract may lead to critical contractual clauses being incomplete and having no legal effect. 

Considering that the point of a commercial contract is that it is legally binding on the parties, having clauses that do not suit your business or do not have any legal effect due to the deletion of other clauses makes a mockery of the written agreement.

3. Lack of Legal Advice on Clauses

One of the main advantages of having a commercial lawyer draft a tailor-made commercial contract for your business is the legal advice received alongside it.

A lawyer can help your business figure out the best clauses to include (and avoid) and the best way of phrasing them. Your company can also gain an understanding of best practices and which clauses are weaker from a legal perspective (as some contract clauses are more enforceable than others).  Naturally, some businesses will include provisions that may not be legally binding to try and motivate other parties regardless.

Key Takeaways

Every company in the UK is unique in terms of what they offer clients and how they perform their business. Accordingly, no one commercial contract suits all businesses and relying on another company’s contract can cause problems down the line.

If you need help drafting and creating commercial contracts, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page. 

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