Do Small Businesses Need Attorney-Drafted Contracts?
Contracts are the foundation of business relationships. Whether you are hiring, signing a commercial lease, or selling a product or service, you are forming a contract. But when it comes to drafting contracts, cutting corners can cost more in the long-term than you save in the short-term.
Can You Draft a Contract Yourself?
Basically anyone can create a contract. A contract is generally binding if it is for a lawful purpose, between parties that all have capacity, and includes an offer, acceptance of the offer, and consideration. In California, a contract does not even need to be in writing to be binding unless it is for real estate, the sale of goods worth $500 or more, repaying others’ debts, marriage, or it takes more than a year to complete (but failing to put the contract in writing, even when it is not required, can be dangerous because it will be difficult to prove the contract’s existence or its terms). So, you can technically create a contract yourself, but there are risks associated with this DIY approach.
Risks of DIY Contracts and Online Templates
It may be easy to find a contract template online or attempt to draft a contract yourself, but this can be risky for your business. Unless you are legally trained, if you draft a contract yourself, you may leave out important provisions that protect your interests or include ambiguous language that can lead to disputes over interpretation. You may also accidentally include clauses that either waive some of your rights or require you to take on additional obligations.
These issues can also be true for contract templates that can be found online. And some terms found in online contract templates may not be enforceable in your state. For example, in California, a non-compete clause is generally unenforceable in an employment contract. Having an attorney draft the contracts your business needs can help prevent many of these issues.
Benefits of Attorney-Drafted Contracts
An attorney can help ensure a contract is legally binding, complies with the law, does not include ambiguous terms, and adequately protects your interests. While attorney-drafted contracts require an up-front cost, litigation over poorly drafted contracts will almost certainly cost more. Think of an attorney-drafted contract as preventive care for your business. You spend a little now to avoid costly problems later.
The text above is intended for informational purposes only and is not legal advice. For advice tailored to your situation, please consult with an attorney.