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It can be tempting for you, as a business, to make processes more efficient and take shortcuts when entering into commercial agreements. One way you may do this is by using legal template documents. However, using free downloadable templates instead of drafting a contract tailored to your business can be risky. This article will explore some of the risks of using a downloaded document template contract without consulting a solicitor.
Why Do Contracts Matter?
As a trading business, well-drafted contracts are critical. A contract should clearly record the basis on which you will deliver products or services to your customers. Contracts should be carefully drafted and tailored to your business and how it operates in practice. They should also consider the key risks you will face and mitigate them.
For example, your contracts should include vital clauses that limit your liability to customers if they experience some kind of loss when your contract is breached. For this reason, businesses often work with specialist commercial contract lawyers for legal advice and support. Commercial contracts lawyers are well-placed to advise on the key terms your contracts should cover and how best to protect your business from various risks that could arise from trading.
What Are the Risks of Using Template Documents Without Legal Advice?
For various reasons, you may choose to download a template contract online. For example, it can be quicker and easier, or cheaper, than a solicitor preparing a contract. While this may seem preferable, particularly if you are a small business, this approach can come with risk. As such, it is advisable to seek legal support when drafting business contracts. Some key risks that come from using these general template contracts are explored below.
1. Lack of Suitability
You must use the correct format for your contract as a business, and the legal terms you require will depend on your business activities. For example, a manufacturing services business will need a very different contract from a software licencing business.
Given the various templates published online, you may find it challenging to understand which contract is suitable. This could lead to you selecting the wrong template contract, which may be too generic or fail to mitigate your business’s risks properly.
The wrong contract can also lead to potential misunderstandings with customers and potential customers. Similarly, where templates are too vague, you may end up engaging in back-and-forth negotiations with consumers.
There is no guarantee that the contract you download is specific enough for your business circumstances, which could heavily reduce the protection the contract offers you in practice. This is especially significant when your business encounters unexpected issues, and the contract you use is crucial to problem-solving.
2. Limited Insight from Legal Advice
It is questionable as to how reliable downloadable template contracts are unless a professional law firm has drafted them. By working with a solicitor, you can seek professional advice on your template contract and whether it is adequate. If the template is suitable to use, a solicitor can help you tailor it so it is drafted correctly and protects your business from risk.
Template contracts may omit some key provisions your business needs to protect itself. Usually, purchasing off-the-shelf documents means you are responsible for their contents and checking that they are suitable. As such, you will likely need advice on legal issues using template documents in order to understand if they work for you.
Importantly, you must also comply with your own contract terms. Working through a contract with a lawyer will help ensure you understand what your obligations in the contract are. If not, you could breach your own contract, causing your customer to take legal action against your business.
There may also be certain mandatory legal terms that your contract must include, such as to comply with consumer or data protection law rules. A solicitor can advise you on this after getting to know your business and identifying the key legal requirements applicable to it. Without seeking legal advice, your business contracts could omit specific provisions, meaning you are in breach of legal rules. This could give rise to various regulatory risks.
3. Possible Mistakes
Without legal knowledge, you may be unable to complete your business template contracts correctly. For example, the template contract might include space for you to insert your company’s customer payment terms. You may, however, insert wording that is incorrect or unclear. Such issues can lead to problems later down the line, such as:
- mismatched expectations; and
- customer disputes over the lack of clarity.
By working with a lawyer on your contracts, you will be comfortable knowing your contracts are professionally drafted and accurate. Engaging legal support will ensure that you avoid any omissions or mistakes, reducing the scope for contract disputes.
Furthermore, laws and legal requirements can change from time to time. You may, therefore, need to revisit your contracts to ensure that they comply with applicable laws. One relevant example is fast-changing data protection laws, which have recently required suppliers to amend their contract terms. However, downloadable templates are often unable to keep up with these relevant legal developments. As such, you should not consider a template contract as a ‘one and done’ document that you can rely on.
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Key Takeaways
Business contracts are crucial for the day-to-day operation of your business and risk mitigation. Although template contracts may seem quicker and cheaper to complete, using them without legal advice comes with potentially negative repercussions. This could lead to several problem issues for your business, including confusion, misunderstandings and more grounds for customer disputes. You must ensure the contracts you use are appropriate, drafted correctly and protect your business from risk. As such, seeking legal advice on your business-critical contracts is a sensible investment to protect your business in the long term.
If your business needs help with tailoring a template contract, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers who can answer your questions and draft and review your documents. Call us today at 0808 258 4780 or visit our membership page.
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