A contract template is a standard pattern for an agreement of some kind that can be filled in with information and used as a contract. Contract templates are often used in situations where the same agreement can serve in multiple situations, over and over, with very few changes.
For example, a small business that provides a service consisting of materials and labor, such as a carpet cleaning business or a plumbing contractor, would use a contract template as a receipt for their customers. Or a landlord who owns many residential apartment properties and rents them out multiple times might have a standard residential rental agreement
Contract templates are sometimes called standard contract forms. They use language that is referred to as “boiler-plate language”, which is language that is standardized and formulaic, as opposed to language that is tailored to suit a particular transaction or purpose.
The internet is rife with websites that offer contract templates for all manner of business transactions, such as selling a business, real estate transactions of various types, and the sale of all manner of goods or services. Many sites claim that their templates have been tested and proven effective, but that claim should be treated with skepticism.
A contract of any kind is only really tested when one party files a claim for breach of contract and a court rules on an issue of contract interpretation. A person can be quite certain that such court cases, if they have happened, are rarely, if ever, reported to the website that sells the contract template.
The alternative to a contract template is a customized contract that is usually drafted by an attorney in consultation with their client. Negotiation of the deal that is written up in a contract might take place before the contract is drafted, and the attorneys for the parties might help with those negotiations also.
What Are the Benefits and Disadvantages of Using a Contract Template?
Contract templates can be very helpful at times and for certain purposes. For example, contract templates can:
- Save time and resources spent on drafting new contracts each time a certain transaction is made;
- Provide uniformity for transactions and deals, when that is a desired goal;
- Be perfectly adequate because a new, customized contract simply is not necessary for standardized transactions e.g. rentals of residential real property;
- Possibly make it easier to keep accurate records of transactions.
The residential landlord mentioned above does not need to revise or rewrite the contract used for multiple rentals over time. The rental agreement has worked successfully and has probably been tested in eviction proceedings. It may need to be reviewed by a lawyer and updated from time to time, but basically it is adequate for its purpose.
On the other hand, using the same contract template for multiple transactions can have its disadvantages. The obvious one is that templates do not offer flexibility in contract terms. A particular contract template might not offer the right terms and conditions for a certain transaction. Or, the terms of a contract template may not cover all the terms agreed to in a particular negotiation. In short, a contract template may not offer the most appropriate statement of the terms and conditions that the parties want for their particular situation.
Can a Contract Template Be Modified?
Existing contract templates can often be modified to change certain parts or terms of the contracts to reflect the needs of the parties to the contract. This usually requires satisfaction of the requirements that are needed for entering into legally enforceable original contracts. So, there would have to be an offer by one party, acceptance by another and the like.
On the other hand, some contracts contain no-modification clauses. These are instructions in the contract that prohibit modification in the future, or limit the ways in which a modification can occur. This would limit the options for modification.
In the end, if a certain contract template contains language that does not fit a particular transaction and cannot be easily modified to do the job, it may well not be the right contract template. Or, the situation may require a customized contract.
There are a number of factors to consider when trying to decide whether a contract template is adequate for some purpose or whether a person should hire a lawyer to draft a customized contract. Among the factors are the following:
- A Person’s Expertise: A person would want to consider how comfortable they would be with preparing their own document from a template. This would include thinking about the person’s particular kind of business, their knowledge of the law and standard contract practices relating to that business, and the person’s ability to engage in any necessary legal research.
- A person would want to think about how complicated the transaction is. For example, the sale of a business could involve many complicated issues, whereas a simple transaction for providing a one-time service would not. So, a simple one-page contract might be adequate in one situation. The other transaction may require a multiple-page contract or even several different types of agreements;
- Amount at Risk: If a transaction is of limited financial value or involves little financial risk, a template might be good enough. On the other hand, if the transaction has a high value and a person does not want to take any risk of loss, then it might be worth the cost of hiring a lawyer to prepare a contract. If a person has spent their whole life establishing a business that they are going to sell, they probably do not want to take any risks. They would probably choose to consult a lawyer experienced in advising about the sale of a business;
- The Role of an Attorney: A person might think that bringing an attorney into the negotiations would result in a better deal. An experienced attorney may know about issues that should be addressed that a person might not be aware of. An attorney might possibly get a party to a negotiation a better deal than they could obtain for themselves;
- A Person’s Level of Experience: Again, a main factor is whether a person knows the business and the type of transaction for which they need a contract. For example, when hiring an employee, a simple employment contract may not be sufficient. The situation may require more than one contract, such as a non-compete agreement, a confidentiality agreement and/or a non-disclosure agreement. If a person is confident that they know what is required, they may feel confident that they can provide themselves with the contract they need, or with multiple contracts, as the case may be.
Do I Need a Lawyer for Help with Contract Templates?
Working with contract templates has its advantages and disadvantages. If the situation with which you are dealing is straightforward and something you have done before, a contract template may be useful. It may serve your purpose.
On the other hand, if the transaction is complicated and a lot of money or property of high value is at stake, a person may think it wiser to consult an experienced contract lawyer for help in negotiating and drafting a contract. Your attorney might be of help in negotiating a transaction and can educate you as to the possible consequences of certain contract terms and conditions. If the subject of your contract represents an important asset, you may want to consult a knowledgeable lawyer for guidance.