The “Simple Contract”
If I earned a nickel every time someone asked me to provide a “simple contract,” I would be a rich man indeed. The problem is, when most people think of “simple contract,” they think a short, one-or-two page document, that protects their interests, without getting them into trouble, and without having to spend any time or money creating such a document or evaluating / fine-tuning a pre-existing template.
In other words, what they mean is three things together: (1) short, (2) good, and (3) inexpensive or free.
If you are one of these business leaders seeking such a basic contract, please believe me when I tell you there is no such thing as contracts that are short, good and inexpensive or free. “short and good” is certainly attainable, and “inexpensive or free” is also attainable. However, all three together is almost impossible.
Good and Short Contracts are Hard to Write, Therefore Costly to Generate
In essence, good contracts do two things: First, their language provides the appropriate legal coverage necessary for the subject matter. Second, they apply to the specific business, and its policies and procedures. A good contract needs both. If you have great legal language, but it doesn’t apply to your specific business, it’s not helpful. Likewise, if you have a contract that applies to your business, but it’s legal language is a mess, that’s not helpful either. You need both.
For example, a short “promissory note” you find on the Internet could be great in one state, but actually illegal in another state because it charges too much interest or doesn’t have the right disclosure language. Similarly, if the contract’s language is correct for your state, but has the wrong cancellation policy or refund policy for your business, such a contract could create significant liability for your business.
Therefore, a good contract will actually protect your interests, and do so in a way without creating potential liabilities for you, and give you the ability to hold the other party accountable for a breach of the contract. Such good contracts are hard to write, because it takes significant skill and expertise to evaluate the needs of your business, and determine what key legal language can be removed given the circumstances.
It unfortunately takes a trained professional to determine whether a short contract is a good or bad for your business, in both its legal language and applicability to your business.
Spend the Money, When the Risks are High. Avoid a “Simple Contract.”
If you are trying to come up with a template contract for your clients or customers, you want to bite the bullet and spend the money on a good contract. A basic contract is fine, but view it from the context of short and good, not inexpensive or free.
Likewise, you want a good contract when you’re dealing with real property or an important transaction, such as buying a business (where you could potentially be acquiring unlimited liability, even though it’s a small sale).