Contracts are an essential part of both our professional and personal lives. As humans, we deal with contracts almost daily, often without even realizing it. Whether a company wants to come and provide a service to our home or we are in the process of closing a business deal we review, negotiate, and sign contracts almost daily. Unfortunately, many contracts are poorly written resulting in conflict and lawsuits. There are many reasons for this, and I, as an Illinois contracts law lawyer, will explain below why poorly written contracts exist begin with. But first….
What is a Contract?
Before understanding why poorly written contracts exist, it is important to understand what a contract is and why they are important. A contract is a legally binding agreement between parties in which the parties make an exchange. The purpose of having a contract is to ensure the parties have a legal remedy should one party breach the contract. Otherwise, the contract is not worth the paper it is written on. When a contract has terms that are not enforceable, the parties can run into serious problems getting their rights and maybe even getting into lawsuits. So what are the most common contract mistakes? Here are the top 4 contract mistakes I have seen in my practice.
- Having Too Much ‘Template’ LanguageTemplate terms, also known as ‘boilerplate language’ are great tools to get some guidance because there is no need to reinvent the wheel when drafting similar contracts. However, when contracts contain too many boilerplate terms or are complete templates, it often results in a contract that is not enforceable or just sloppy. This is for many reasons. Firstly, these terms may not even apply to the contracting parties. The second reason is that many boilerplate terms are outdated due to changes in the law. Lastly, sometimes boilerplate terms are misused and can even be illegal if they violate the legal rights of one of the parties. Only attorneys can provide legal advice about boilerplate terms and templates and know which ones will work for your contract.
- Confusing TermsA contract is only as good as it can be understood. In other words, if the parties can not easily understand what they agreed to, then it can result in conflicts later. Even worse, in the event that a contract is being litigated and the judge can not understand the contract, then you have an even bigger problem. In my practice, I draft my contracts in such a way that the average non-lawyer can understand it and I avoid using too much ‘legalese.’ At the end of the day, the contract needs to be easy to understand to have real value.
- Having Terms That Courts Will Not EnforceWhile people can agree to almost anything, there are some contracts that courts will not enforce either because enforcing them does not make sense or the terms violate public policy. In Illinois, for example, non-compete agreements must be written in a certain way in order to be enforceable. You can learn more about requirements of a non-compete agreement in my free resources section. Another example of non-enforceable contracts are ones where employers violate their employees’ rights such as putting in the contract that the employer will pay less than minimum wage. An experienced contract attorney will know which terms are not enforceable.
- Not Signing ContractsWhile it’s true that contracts do not always need to be signed to be enforceable, not having a signed contract can still be a problem. Firstly, there are some types of contracts that still require signatures such as contracts for the sale of land. Secondly, huge disputes and lawsuits are a risk because parties often negotiate terms, never sign, but carry on their relationship. When a dispute happens, they will disagree about what occurred during the negotiation and what they agreed to. Since they never put their negotiations in writing, it’s all he-said/she-said. For this reason, it is very important to come to a final agreement and make sure all parties sign off.
Attorney Danya Shakfeh and her team specialize in contracts, business disputes, non-compete agreements, LLC contracts, and more. If you need assistance with any of these matters, call us today (630) 445-0695.