Look before you leap!

{3:15 minutes to read}

Very often, individuals and companies are presented with documents that they are required to sign in order to obtain a service, purchase goods or engage in a transaction.

Unfortunately, these contracts can be lengthy, written in small print, and/or written in “legalese.”

As a result, many people and small businesses do not fully understand the ramifications of the contracts they sign. Many others do not even read them, and fewer still contact an attorney to review the language for them. The contracts themselves can range from simple form agreements given to the average consumer to much more significant documents such as a lease or agreement for services.

For those who do read the proposed agreement, any questions or objections to a provision are often greeted with surprise, and, at times, annoyance that the recipient actually read it. In almost all such cases the recipient is given perfunctory explanations, such as, “This is a form; it cannot be changed,” “It’s only boilerplate; it doesn’t really mean anything and we would never try and enforce it,” or “Everyone signs the same contract; we’ve never had an objection and can’t make an exception.”

Under the impression that he or she has no choice but to agree, the seemingly pragmatic choice for some recipients is to sign the contract and hope for the best.

Sometimes the gamble pays off and there aren’t any significant problems.

However, contracts do have meaning – that is why recipients are required to sign them. In a very real way, they can be held to the letter of the contract. The rights someone has forfeited, as well as the penalties he or she has agreed to, remain enforceable unless a provision violates applicable regulations, law or public policy. This can be true even in contracts which are often referred to as “adhesion contracts,” where one side has all of the power and the other does not have a real opportunity to negotiate terms. Before signing such an agreement, parties must make sure that they understand what they are getting, what they may be giving up and what they are obligating themselves to, and decide whether they are comfortable with the risks and rewards.

This does not mean that a party should never sign an agreement if there is a provision that causes concern.  Agreements – especially heavily negotiated ones – are the product of a give and take between parties, with each side deciding how much of a risk they are willing to accept on some term in order to get the deal done. However, these should be informed, well thought-through decisions that are the result of real negotiations.

When you are told, “Don’t worry, it’s just a form; boilerplate. Everyone signs it, we can’t really change it, it doesn’t mean anything,” take it as a cue to start worrying. Give serious thought to the provision that is troubling you. A good rule of thumb – and a great comeback to the the person telling you not to worry – is thus:

“If something is important enough for you to put in writing, then it is important enough for me to read.”

And if it is a document that may have significant legal consequences attached, it is important enough for you to have your attorney read it, as well. If you have questions or comments, please contact us.


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