Ways to Deal with a Standard Agreement

Apr 04, 2016

Companies should be wary of contracts referred to as “standard.” Clients often ask attorneys at our firm whether a contract should be reviewed because it is a “standard contract.” When contracts are referred to as standard, an attorney might interpret that 1) the contract was likely either not read, 2) the contract is not understood, 3) the client is not sure whether they want to spend the money to have the contact reviewed, or 4) the client has delayed review and would like to hear that it is okay to sign the contract as-is after a cursory review. 

If a company representative is going to bind its company to terms and conditions, it is certainly prudent to have legal counsel thoroughly review the document before a signing. Such action can save a company from potential legal, business, and financial problems created by the agreement. Unfortunately, many business agreements are written to be advantageous only to one party, which can delay the sales process, and increase the expense for both parties.

Even if a business feels as though there is not enough time or leverage for a negotiation process, there are still some ways that an attorney can help a business without revising the agreement:

Identify Business Risks

Contracts attorney have the benefit of seeing many transactions from various businesses even if specialized in a narrow area of law. Drafting and negotiation many similar, but unrelated, transactions allows an attorney to determine what is normal or appropriate from both from a legal and business perspective depending on the circumstances. Even if a business does not want to negotiate any legal issues, it can be helpful to obtain insight on the business points. For example, it is what is missing from an agreement that could pose the most risk.

Explain Legal Terms

There are situations where a business understand and accepts the business risks, but not the legal issues. It can be helpful to learn how the two can be related. For example, a business could benefit by understanding what the indemnity means as it relates to the limitations of damages clause.

Discuss Ambiguities

Contracts can be written in ways that make them more confusing than necessary. Sometimes it can help to have a legal perspective about what certain terms mean. What is clear at first sight may actually have multiple interpretations. Discussing these different perspectives can empower a business to ask clarifying questions to gain a more powerful insight into the transaction. 

Assist in Negotiation Points

After talking through a contract with an attorney, a business may want to address a few negotiation points. It can be helpful for a business to know its position, what the highest priorities are for gaining clarity or making changes, and the likelihood of success on certain deal points.

 

Of course an attorney can also make substantive revisions to an agreement, but this is not always necessary or practical. Companies can utilize legal counsel to gain a better understanding of a transaction before signing, even if there no intention of making changes. One thing that every business should learn is that there is no such thing as a standard agreement.