This will be a series of posts to address issues that can be uncovered simply by having an attorney review a contract.
Signing a contract is a big deal. We seem to have become desensitized to it by having to click “I Agree” all the time to terms of service, end-user license agreements, and so on. This series, though, will focus on contracts between parties who are more equal players and may have even taken a stab at drafting a contract on their own.
When you sign a contract you are committing either yourself or an entity to do or refrain from doing certain things. This is not shocking. You’re intelligent, write well, and put yourself through college. The contract is written in English. You read it. You think you understand it. So, why waste money hiring an attorney to review it. Having an attorney review the contract before you sign it is cheap insurance. It could be just the thing to help you avoid a contract dispute down the road.
What is the point of the contract? Having an attorney review a contract gets an extra set of eyes on the document. You may think the terms of the contract are perfectly clear. Are they? Is the language precise? Is it clear who is supposed to do what and when? Are your duties clearly defined? Is your relationship with the other party ambiguous? An attorney’s review of the contract would help alert you to these issues.
Are you merely investing in your friend’s company, or will the law consider you partners (and on the hook for liabilities that your friend incurs)? Are you paying just for the service of designing that new logo, or are you buying all rights to the logo too? These are just some examples where ambiguous contracts can create lots of problems down the road.
Why does it matter? The terms of the contract set expectations. What will be expected of you? What rights do you have? What is the other party supposed to do? If the contract isn’t clear about the parties’ rights and obligations, then there could be big problems. One party may think they didn’t get what they bargained for, while the other may think that they exceeded what was required of them. That kind of misunderstanding can doom a relationship and lead to a lawsuit.
Having an attorney review the contract will not guarantee smooth sailing, but you may learn that you were about to dance with a tar baby. It may just be the thing to stop you from making an expensive mistake.