The ‘Loophole’ Client

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The ‘Loophole’ Client

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It probably happens in many industries. Your client wants a shortcut. ‘Can I do this and get away with it?’

In the legal field, it often comes in the form of a contract client. ‘My contracts says XYZ, but can I do ABC instead and get away with it… is there a loophole?’ I almost always tell my clients ‘No.’ You see, in contracts, there are two types of clauses: 1) clauses that have a history of interpretation or written in a conventional manner and 2) clauses that are vague and need new interpretation. A ‘loophole’ can only fall in the first type of clauses because if you are in the second type (and since most contracts are unique, most clauses will fall in the second type), the only way the clause will be officially interpreted is in court. So the only way to know if a client can ‘get away with something’ is if they go to court. And that’s always risky.

Attorneys can interpret contract clauses based on known contract principles, but at the end of the day, if a contract ends up in court, a judge’s interpretation is the only enforceable interpretation. So for example, if the client comes with a non-compete clause and wants to know if he can open up a competing business, a lawyer can read the contract and research past cases (known as ‘precedent’) to determine a likely interpretation, but a lawyer can never say for sure, particularly when the clause is written in an unconventional manner or if precedent is lacking. I tell my clients they have three options 1) go to court and challenge the clause, 2) do whatever it is what you want to do and see if you’ll get sued, and 3) simply abide by the contract. I usually recommend option #3.

This is yet another reason why contracts should be reviewed by an attorney BEFORE you sign the contract. Because in the end, when what’s done is done, violating a contract clause is always risky and can open the door to many more problems.

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