In-House Counsel

Cookie Cutter Contracts

By Hanna

Standard form agreements simplify business transactions.  But when was the last time you read all that tiny print written and sentences that go on forever?  And, what about those sections that scream at you in all capital letters? 

Most clients make the assumption that these preprinted forms are “standard.”  But when you take a closer look at them you often realize that only a handful of items are truely “standard” between agreements and the rest of the verbiage often reflects a very different deal from the one you thought you had. 

Take for example, a standard form agreement I recently saw from a service provider tried to disclaim any responsibility or liablity for their own negligence and any performance or non-performance under the agreement.  The net result was that they weren’t obligated to do anything.  But boy were you obligated to pay, pay, pay.

The five year contract only had price protection for 3 years with no formula or cap for subsequent cost increases thereby putting the company at the vendor’s mercy.  Yet, if you wanted to terminate the contract early you still owed them 90% of the fees for the balance of original five year contract period.  Ouch!

The fine print can turn a good deal inside out.  It really does pay to read it.

Full post as published by Legal Literacy on November 06, 2007 (boomark / email).