Does That Really Need to be in my Contract?

I see a lot of contracts that are long on words but short on substance. Companies have standard sales agreements that are 15 to 20 pages when they could (and should) be 5 to 7 pages.

Why are contracts so lengthy?  In many cases, it is because that’s the company’s form and nobody has taken the time to think about the downsides of using a 20-page monstrosity with antiquated wording nobody really understands.

What Are the Things Every Contract Must Have?

  1. An offer,

 

  1. Acceptance of the offer;

 

  1. Consideration (something of value, such as money or a work of art);

 

  1. Legal subject matter (i.e., NOT a contract to rob a bank); and

 

  1. Identifiable parties who have the legal capacity to enter into a contract.

How Long Should a Sales Contract be?

Just long enough to contain the essentials, written in plain English that is easy for the customer to understand and sign.

The essentials include a clear (i) performance specification; (ii) schedule; (iii) payment terms; and (iv) acceptance criteria.

What are Some Clauses That are Nearly Always in Contracts That Could Probably be Left Out?

Indemnification, Limitation of Liability, and Confidentiality.

Why should One Leave Them out if They are Commonly Included?

Because these clauses waste time and cost money to read, understand, and argue about! They should only be included if the risks of loss or damage are high enough to warrant putting them in.

Must a Contract be in Writing to be Legally Enforceable?

In many cases, no, but any agreement on which you intend to rely should be! Written agreements are much easier to prove than are oral ones.

Conclusion

Sometimes, knowing what to leave out can be as important as knowing what to leave in.

If your sales agreement is often the subject of multiple rounds of negotiation, it is time to have it updated by a lawyer who knows how to turn it into a tool for getting to yes.

Michael Oswald

michael@msochartered.com

www.msochartered.com

Please note: the above post contains educational information. It is not intended as legal advice. Engage an attorney who is licensed in your state to get advice on dealing with any specific legal issue.

© 2019 Michael S. Oswald

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