When to Use a Business Contract Template Instead of a Customized Business Contract

When to Use a Business Contract Template Instead of a Customized Business Contract

by Edward A. Haman, Esq., November 2019

Most businesses encounter at least one situation that calls for a written contract. For example, you may need a contract with a supplier or customer, a lease agreement, a partnership contract, or a contract for the sale of a business. Once you've identified the type of contract you need, your choices are to use a business contract template or to hire an attorney to prepare a custom document.

When to Use a Business Contract Template Instead of a Customized Business Contract

Customizing Your Business Contract

Whether you use a business contract template or hire an attorney, the document needs to be customized for your industry, your company, and your situation.

For financial reasons, many people are reluctant to hire an attorney, even if they think it would be to their advantage. In some situations it is possible to create a business contract without an attorney. In other situations, hiring an attorney may save money in the long run.

Fortunately, for those who decide to forgo an attorney, this is what might be called the age of self-help. Today, there are numerous legal self-help books and websites that can help people find the assistance they need.

These books and websites provide business contract templates for many types of businesses and many different situations. They also include information to help you understand the legal requirements and to customize the templates.

If you use a template, you need to be sure that it complies with the legal requirements of the state where you operate your business. Some templates are state-specific, while others are not. Using a template that omits something that is required in your state—such as some type of consumer protection provision or health warning—can be costly.

What Attorneys Don't Tell You

Attorneys who are hired to prepare a legal document—whether it is a contract, will, trust, or power of attorney—don't just sit at their desk or computer and start from scratch. They begin with a template.

If the document they need to prepare is similar to a document they have prepared before, they take the document they created before and modify it to suit the current client. If they've never prepared a similar document, they consult a legal forms manual for a template, or go online and download a template.

Of course, this isn't exactly the same as your downloading a template and modifying it. The trick is in knowing how to modify it. Doing this properly may require a combination of your knowledge of your business, and the attorney's legal training and experience.

The attorney may modify the template, or may delegate that job to a paralegal. In either event, you will still need to read the document carefully to be sure that you understand it, and to be sure there are no errors. For example, an attorney in Michigan prepared a Michigan living trust by using a California template, and missed changing the provision that said: "This document is controlled by the laws of the State of California."

Decision Factors

Whether you should use a template or hire an attorney will depend upon various factors. These include:

  • Whether you need a common contract or one that covers a relatively unusual situation
  • Your degree of comfort with preparing your own document from a template; this will take into consideration your particular type of business, your knowledge of the law and standard contract practices relating to that type of business, and your ability to do any necessary research
  • The complexity of the situation requiring a contract; in some situations a simple one-page contract may do the job; however, other situations may require a multiple-page contract or several different types of agreements
  • The amount of money and financial risk involved; for example, if the contract involves a deal worth $200, you may not want to pay an attorney $200 per hour to prepare the document
  • Whether you think that bringing an attorney into the negotiations will get you a better deal
  • Whether you know what type of contract you need; for example, hiring an employee or independent contractor may require several contracts, such as an employment contract, a noncompete agreement, and a confidentiality and nondisclosure agreement

While you may know your particular industry best, an attorney may be more knowledgeable about hiring employees and independent contractors, protecting intellectual property, or the rental or purchase of real estate.

All of this boils down to the question: How confident and comfortable are you with preparing your own contract? The answer to this question will vary with the person and with the situation. Whatever you decide, exploring business contract templates will increase your knowledge and your confidence—whether you're preparing the document yourself or reviewing the work of an attorney.