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The Danger of Signing Form Contracts

On Behalf of | Oct 16, 2017 | Business Management

They’re out there everywhere. There’s form of contracts for this and form of contracts for that. In our prior blogs, we’ve warned about some of the risks of using forms for your business, but what about when a form’s presented to you by a vendor or by a customer? Do you just take it and sign it? The answer should generally be no. There’s a lot of things that could be wrong in a form contract. Many times we found that the form contracts have been re-utilized or copied and pasted. These forms, if they’ve been gone over by a lawyer, could be very much in favor of the other party. For instance, in a form contract I recently reviewed, there were provisions that caused my client to legally be obligated to cover some of the ongoing, normal business expenses of the other party. Whether this was their intention or not is unclear, but it’s certainly unfair for my client to have to pay that.

There may also be issues in the litigation section, choice of venue, choice of law, allocation of payments, and calculation of payments. There can be so many things in a form contract which could be unfavorable to you as the signing party. Be very careful. Just because a contract is a form doesn’t mean it’s good for you. You want to carefully go over it. You probably want to get your lawyer involved and you want to make sure that you understand what’s going on in a contract.

What’s been your experience with form contracts? Have you ever regretted signing a form contract? Join us in the comments below.

This posting is intended to be a tool to familiarize readers with some of the issues discussed herein.  This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances.  This article should not be treated as legal advice to any person or entity. Each case is unique.  Past results do not guarantee future outcomes. Milda K.

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