Monday, November 17, 2008

Contracts Until your Head Explodes

Contracts. I hate contracts. You hate contracts. Everybody hates contracts. But you just have to have them. You even have to read them. You are bound by them and protected or screwed by them, so lets learn little about the whats, whys, hows and whens of contracts. Sigh.

A contract is a promise for a promise. If it’s a good contract those promises will be enforceable by law in your state. Contracts have certain terms and formalities that must be followed. They can be written or oral except in a few circumstances and they should contain the entire agreement between the parties including what happens if the contract fails.

An oral contract is still a contract. It is not true that they are useless. It is true they are harder to prove. However, if part of the contract has been carried out a judge will likely find that a contract existed because people generally don’t run around doing things for free and if the other party also started completion of the contract thats more proof it’s a contractual arrangement and not an ABC reality show where a millionaire just gives you money for being really really worthy.

A written contract is better then an oral one, but a badly written contract is worse then an oral one where a judge may fill in the terms. There is rarely a combination of a written and oral contract. If you mean for it to be part of the exchange of promises then put it in the contract. The judge will assume since you bothered to write it down and sign it that’s the deal you meant. In only very narrow circumstances will any oral provision be enforced in the presence of a written agreement.

Writing contracts is not for the amateur. Remember, it’s binding, so what you leave out can come back and bite you in the butt as much as what you put in. Having a really nice contract for the wrong state can make your life miserable too. Not all states have the same laws for contracts. So not only do I not recommend writing your own contracts, I also discourage buying generic contracts on-line that are not tailored to your states laws. If you buy one made for your state that’s great, but the person who wrote it and charged for it needs to be licensed to practice in your state or they just broke the law. That doesn’t mean a form book isn’t going to help you if they hired attorneys from your state to write the contracts, its just means if the contracts are no good you can’t sue a book for malpractice and you can’t sue an attorney illegal practicing across state lines either.

I have only studied contract law for 2 different states, however, the differences were dramatic. If I tried to use contract 1 in state 2 it would not protect my client. Little things like font size and specific wording can make or break a contract in court. Can you look up the laws yourself and learn how to write a contract for your state? Sure, but you can probably pay a lawyer to write you a contract for much less effort. Here’s the thing. We are not writing contracts to make you and the other party stick to the deal, we are writing contracts for the other parties lawyers. When I write a contract I am only thinking about what another lawyer will do to break it in court. That means I have to know as much as another lawyer and hopefully just a little bit more. Can you still learn all that on your own? Sure, but it’s boring as hell and involves lots of Latin. Yuck.

Most people want short simple contracts. I can’t blame them, but if you look at the contracts of businesses that have been around for awhile, you realize there is a correlation between length and time. The longer they have been around the more things they learned the hard way and the more stuff they add to their contracts. I never see them get any shorter, I just see them have more clauses for things they never foresaw happening. Clients may be turned off by lengthy contracts, but clients also happily click that button agreeing to page after page of terms and conditions on websites every day and never think twice about it. It should be OK to act like a business if you are going to enter into a business transaction. It might be better to scare off a few clients now then have that many sue you later. Which, by the way, is my next personalized license plate: SUUL8TR

Lawsuits involving contracts are not like when you sue someone hoping to win big. In contract law the goal is to put you where you would be if the contract was followed, not to punish or make you where you would be if there had been no contract. What this means to you, as a client, is that lawyers do not take contract cases on contingency hoping a jury awards a few million. That means you have to pay. Quite often it will cost more to litigate then you have already lost. It is, however, much cheaper to pay for a good contract to start with and then at least the lawyer is on the hook if its really a bad contract. The better the contract the easier it is to win before you pay for all that litigation. In fact, with a really good contract you can skip the litigation and win based on the fact opposing counsel can’t find a way to beat it and tells her client to just pay up. I have agreed to contracts in the last month which leave me no rights at all no matter what the company does. I can still sue and maybe even win, but it will cost me more then I will ever lose just because the breach of contract. I simply wont sue.

Over the next few posts we’ll talk about some specific contracts that come up often with animals like boarding contracts, breeding contracts, leasing contracts and sales contracts. Doesn’t that sound fun????

No comments:

Post a Comment

If the comments do not work, somebody please e-mail me and let me know. Thnx!