We know you are out there – business owners and individuals who resort to cheap form contracts purchased online or from an office supply store.  You have so many expenses and you’ve heard issues rarely occur.   The form is affordable.  You are a good person who never has issues.  The form is published, anyway, so it must be properly vetted, right?  For those counting on good luck, good will, best intentions, and the decency of all humanity when contracting – here is some free advice! Please at least make sure the form contract has an attorneys’ fee shifting clause!

I’ve never seen a form contract that I would put my name on.  Numerous material changes are typically needed.  Years ago, I read a construction contract sold in a New Jersey office supply store which failed to comply with New Jersey consumer protection regulations.  I’ve seen various form contracts cost business owners thousands of dollars when issues “somehow” arise.  I’ve never recommended form contracts.  All too often, the forms have missing or inadequate terms to protect their users during legal disputes.  We are then hired to represent the client, yet must rely upon the form contract.

Don’t use them!  However, if you insist upon using these forms, please make sure they have an attorneys’ fee shifting provision.

Essentially, nearly all contracts should provide that the prevailing party in any dispute is entitled to an award of attorneys’ fees and costs.  This clause typically may be bilateral – meaning both parties have the benefit of this clause.   Imagine someone breaches your contract, but you cannot collect attorneys’ fees and costs when suing them!  Worse yet, imagine you have a dispute, and the other party may demand that you pay their costs if they win, but you are without such protection.  This simple provision changes the playing field.

Attorneys’ fees shifting provisions discourage frivolous litigation, encourage settlement, and when prevailing at trial, can ease the costs of litigation.

Of course, even this advice should be customized for your particular needs, in light of your industry practices and regulation, and properly incorporated into your contract.  And, to be clear, this free tidbit of advice just pertains to fee shifting clauses.  Numerous material revisions may be recommended for a form contract.  Consider hiring attorney Robert J. Shanahan, Jr. to prepare contract templates for your business.  An ounce of prevention is truly worth a pound of cure!