A contract is a legally binding document that lays out rights and obligations for all the parties involved. Unfortunately, it is very common for a contract to be drafted by a non-professional based on a standard template or, worse still, adapted from an existing contract. This is a highly undesirable practice that can have serious consequences. Do you know why?
A contract is a legal agreement, usually in writing (although it may also be verbal) between two or more parties that must have the legal capacity to be bound by it, which creates rights and obligations for both parties. This is an essential element in the Spanish legal framework, but it is not always given the importance it deserves in terms of its potential legal consequences, which may be detrimental to some of the parties concerned.
When preparing a contract, there are three widespread bad practices:
- Entrusting the drafting of the contract to a person who does not have the appropriate legal training or is not a specialist in the field (e.g. commercial law or property law ). A typical case is that of a salesperson drawing up a contract with a customer, or a property salesperson drawing up a lease agreement.
- Using an existing similar contract as a starting point and adapting it to the new conditions and needs of the legal transaction to be carried out. For example, a company may use a contract signed with one supplier as a basis and modify it for use with another supplier.
- Using a contract template (obtained from the Internet or other sources) which has not been specifically drafted for the case in question. A common example is an online shop or online business that ‘copies’ the terms and conditions of sale from a similar website (and often does not even ensure that all references to the other company have been removed).
All of these practices are mistaken because every legal transaction is different. No two contracts are the same. The parties are often not the same, and there are always variations, however small, in the purpose, the price, the method of payment, or any other of the conditions involved. Therefore, the provisions of a contract created at a given time are only valid for those parties, at that time and under those conditions, but not for other cases.
Similarly, all clauses in a contract have their meaning and their raison d’être. They cannot be removed or ‘chopped up’ because someone does not understand them or considers that they do not apply to the case at hand. In doing so, an essential clause may be accidentally deleted, or one that is legally required for the contract to be valid may be omitted. As a result, the best-case scenario may that the contract is void because it does not comply with the law; in the worst-case scenario, it may leave your legal interests unprotected.
Why have a lawyer draft or review a contract
When you have a toothache, you go to the dentist and you don’t try to pull the tooth out yourself; if your car breaks down, you take it to the mechanic and you don’t try to repair it yourself. So why is it that if when one needs to sign a contract, such a major legal act, one tends to think that it is not necessary to retain a lawyer? How is this different from other situations where one usually relies on an expert?
The truth of the situation is that by trying to save the money involved in having a lawyer prepare or review a contract, much higher costs may need to be paid later if problems arise. For example, if it turns out that a contract has been poorly ‘done’, essential items are missing, or the terms have not been properly defined.
If you need to draft a contract, your lawyer will:
- Carry out an analysis of the legal transaction in order to identify the most important aspects.
- Take into account all the laws applicable to each individual situation.
- Draw up a tailor-made contract specifically adapted to the situation.
- Ensure that your interests are defended.
- Prevent the inclusion of unfair terms or errors that may invalidate it.
- Ensure that the contract complies with applicable laws and regulations.
- Ensure that future contingencies are covered and include the necessary safeguards.
No matter how well you know your sector or how many similar contracts you have seen, a law professional is always aware of all the necessary aspects to be covered and can consider the important factors involved in each specific case that you may not have taken into account. A lawyer will never merely adapt a contract template found on the Internet or ‘copied’ from another existing contract.
Similarly, if you need to have a contract reviewed, your lawyer will:
- Explain the contents of the contract to you and make sure you understand it.
- Ensure that the contract is fair to both parties.
- Identify possible unfair terms, or terms that may be beneficial to the other party and detrimental to you.
- Confirm whether the contract is lawful and consistent with applicable laws and regulations
- Propose relevant and properly drafted amendments.
- Incorporate the necessary safeguards in the event that disputes arise.
A contract should ideally be reviewed prior to signature, as understanding the full content of a legal document is essential before entering into it. Only if you are aware of the legal scope of all the clauses can you make an informed decision as to whether it is appropriate to sign the contract or not. But even if you have already signed a contract but are unsure of its terms, asking a lawyer to review it can help you identify problematic issues and take appropriate steps to defend your interests.
Do you need a lawyer specialising in litigation, bankruptcy, commercial or property law to draft or review a contract before or after signing it? I can help you!
