Boot-strapping entrepreneurs can ill-afford the luxury of obtaining legal counsel to draft contracts for their company. Some entrepreneurs even view the high expense of legal counsel for “routine” matters (like vendor contracts or sales contracts) to be foolish. As a result, many play the dual role of attorney and client, searching for suitable contracts on a search engine and altering them to their needs.
This strategy raises several potential problems. Cutting and pasting these types of contracts can create headaches, misunderstandings, and (worse still) lawsuits down the road. Generic contracts downloaded from the internet can leave open many questions that can frustrate an entrepreneurs expectations, and ultimately the objectives of the company.
For one, generic contracts don’t tell you which provisions in the contract are favorable to the business owner and which are unfavorable. Many entrepreneurs think that simply having a piece of paper that is signed is sufficient to protect their interests, but this is missing the bigger picture. It is important that any businessperson, let alone a noob, understand the legal ramifications of every aspect assented to under a contract. In other words, if you don’t know your rights, you will be unprepared to protect them down the road.
Perhaps more importantly, however, is the fact that these types of contracts don’t tell you whether there are any missing provisions that could help you. Many of the contracts found online are too generic to be of practical use, as they may not include important provisions that vary from state to state. Again, education is key, and only through familiarity and legal training can you have your interests protected to their fullest. As much as you may want to fight it, the best idea is to obtain legal counsel to understand and protect your interests.
This is not to say that using the internet as a starting point for contracts is a bad idea. If you are an entrepreneur without the cash for a big-shot attorney, you can take a look at what’s out there and educate yourself on what you may want in your contract. Having an idea of what you want in your contract and coming up with an initial draft for your lawyer will save you a lot of money on attorneys fees. Many attorneys will even revise your contract on a flat fee basis, thus eliminating the worry of high legal bills.
But you should always have legal counsel review any contract that your company produces. Not doing so would be, well, foolish.
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