Self-Drafting and the Contract Pitfalls

§1. Better Fences Make Better Neighbors
The old adage “better fences make for better neighbors” is never more relevant and important to remember than when drafting a contract. Fences are constructed to mark the physical boundaries between properties. Likewise, contracts are constructed to mark the boundaries of an understanding. While it can be tempting to forego an officially drafted document, a solely oral agreement is simply inadequate for marking necessary boundaries and clarifying potential nuances. Think of an oral agreement as being about as effective as deciding with your neighbor that the two tallest trees on the lot mark the boundaries between your properties. You and your neighbor could both be setting yourselves up for confusion and disagreement later on.

Additionally, if you or your neighbor were to construct a fence without first consulting a licensed surveyor, it is probable that the fence would not reflect the actual boundaries. This innocent misjudgment could open both of you up for complications and liabilities. Just like a fence that is built on the wrong lot line, a contract drafted without first consulting with an expert may cause headaches, unnecessary fallout, and possible litigation.

A benefit of having a contract, particularly one drafted by a legal expert, is that it gives you a reliable level of certainty. This not only benefits you and the other party, it benefits everyone that could get involved by preventing unnecessary litigation. For business owners, a primary benefit to the security granted by a well-drafted contract is maintaining a personal liability distance from their entity, with the business itself acting as a legal shield for their involvement. A secondary benefit is that it simply looks professional to provide clients with a well-drafted document that clearly and accurately describes the agreement.

§2. Cost-Effective Mishap Prevention, Rather Than Damage Control
In many cases everything goes smoothly, the contract is performed, and the parties get what they agreed upon with no disagreements. However, it only takes one misunderstanding to cause massive financial and emotional hardships. Even seemingly insignificant misplaced commas have cost many headaches (Rodgers Communications, Canadian Telecommunications Company that nearly lost over $1,000,000 but was fortunate to also have a French contract version).

As a thought exercise, imagine writing a will:
“I hereby leave $1,000 to my three children: Tyrese, Susan and Peter.”

It isn’t hard to believe that no matter what relationship terms your three children are on, you intended for each to receive 1/3 of the total $1,000. Practically speaking, very few people will argue with that.

Now increase the $1,000 to $1,000,000. Regarding such a significantly larger asset, it is conceivable for disputes to arise, especially if relationships were in any way strained. Read the way the names were written, paying attention to comma usage:

“Tyrese[comma] Susan and Peter”.

Does this mean each child will be receiving 1/3 of $1,000,000?

Or does it mean ½ of the $1,000,000 should be given to Tyrese (“Tyrese[comma]”), with the remaining $500,000 to be split amongst Susan and Peter (“[comma] Susan and Peter”)?

While the phrase, “Tyrese, Susan[comma] and Peter” clearly gives 1/3 to each, it is legally convincing that the phrase “Tyrese, Susan and Peter” intends to give ½ to Tyrese, and to split the remaining half between Susan and Peter (¼ to each). Unfortunately, if that is not what you intended, there is likely nothing that can be done to prove otherwise.

§3. The Other Side of the Coin
When worrying about whether or not to bother with memorializing their oral agreement in writing, people often assume both parties (themselves and the other party) to be reasonable and capable of reconciling differences without any legal hassle. Unfortunately, one cannot rely on assumptions as sufficient boundary protection.  In the event that either party wishes to take legal action, a written document is often your best defense. Furthermore, because of the nuances of even a misplaced or misused comma, it is essential that your contract is a professionally-revised document. When well-drafted, a contract will present accurate evidence of the boundaries originally placed between parties and will hold clear meaning regardless of who is reading it.

§4. Avoid Dishonest People
If you scare another party off by requesting a written agreement, you probably shouldn’t be doing business with them. The people who back out before signing any contracts are most often the people who don’t follow through on oral contracts. When parties differ vehemently over an issue, an oral agreement will be virtually powerless if one party is dishonest. A written contract, on the other hand, can resolve the issue painlessly regardless of either party’s personal honesty or integrity.

§5. Do you need a lawyer?
Good lawyers are deal-makers not deal-breakers. Fundamentally, lawyers are in the business of avoiding risk by anticipating potential pitfalls or ambiguities. A good attorney will work with you to understand and prioritize both what you would like to have in your contract as well as what you need to have in your contract. The benefits of a well-drafted contract apply to everyone involved in the agreement.

§6. Conclusion
A written agreement will reduce mishaps and save you time, money, and unnecessary stress. You should feel secure that what is written reflects your intentions and expectations, therefore it is best practice to always read carefully. Ideally, have any written agreement reviewed by an attorney who has your best interests in mind. Your attorney should be someone you can trust and confide in: someone who knows your business, knows your goals, and has the legal insight to draft a document that will make your plans a reality.

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