Pros and Cons of Out-of-the-Box Contracts Weighed by Nancy Park in So. Cal. Newspaper Group
Pre-printed legal contracts and forms are an increasingly popular way to save time and money. They allow you to avoid “re-creating the wheel” by drafting a new contract each time one is necessary. Whether it’s for a real estate purchase or a general business contract, these out-of-the-box forms are enticing… but they come with some drawbacks, too.
Pre-printed forms, such as purchase contracts (the California Association of Realtors’ residential purchase contract is a well-used, pre-printed contract), leases (such as the American Industrial Real Estate Association lease forms, also known as AIREA or AIR CRE forms) and others provide several key advantages.
These forms are usually comprehensive — covering all standard terms encountered in most typical transactions – quick, relatively cheap and non-technical. They allow laypeople, albeit, in many cases, licensed professionals such as Realtors or brokers, to draft legal agreements. Users find it easy to delete provisions that are not applicable or modify to show the parties’ agreement.
However, too often users fail to carefully review the pre-printed sections to know what the contract actually says. It may include terms that were not intended or conflict with the parties’ intent.
People who are charged with completing such forms need to read the document thoroughly several times before completing an agreement for an actual contract. When presented with a pre-printed form, you should read the entire contract to ensure it correctly reflects the parties’ intent, or ask an attorney to do so.
Reading just the filled-in blanks for key monetary or timing terms may result in unintended consequences. Also, the form user should beware that the party who drafted it may have included clauses favorable to that party. For instance, a broker-drafted form may include payment protections for that party, even though a buyer and seller are the intended actual signing parties to the contract.
Pre-printed forms can be advantageous where transactions are consistent and don’t vary much from a standard set of terms. They can help keep company policies and deal terms consistent.
A master form with alternative provisions for different scenarios can be helpful. They bridge the gap between a pre-printed form and a contract drafted from scratch. Many lawyers use some sort of master form, or can help clients develop one. Clients or their lawyer can then apply the template to different transactions, minimizing cost and maximizing efficiency.
Attorneys want their clients to have enforceable contracts that reflect the parties’ intent. Clients want timely, accurate, efficient and cost-effective contracts. Complex transactions that are not typical of a client’s normal transaction deserve a careful drafting hand — one which is trained to recognize business and legal issues of enforceability and practicality. More standard transactions may be well served by an experienced employee who is versed in the form contract terms, in addition to being careful to match the transaction terms to the contract form.
There is no substitute for the careful review by an attorney experienced in the subject area. However, understanding where and when a pre-printed form is most appropriate — and when to call an attorney — can help a business owner best manage its resources.
This article first appeared in The Orange County Register and other Southern California Newspaper Group publications online on Aug. 17, 2019. Republished with permission.
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