You have a contract in front of you – it might be an employment agreement, a severance offer, a waiver of right, or a sales agreement. How do you know if it’s worth getting legal counsel to review before you sign? In this blog post, we’ll raise some flags of when you should get legal counsel to review a contract.
But first, it’s important to understand what goes into creating a contract. Legally binding contracts require several elements:
- Offer: an offer is the tentative promise that begins the negotiations. An offer can be written or oral, or even through conduct. It can be rescinded at any time before the acceptance occurs and creates a legally binding obligation.
- Acceptance: acceptance most often occurs through positive conduct. Usually this is done through express written or oral consent.
- Consideration: to create a legally binding contract, there must be some “consideration”. This simply means that there must be an exchange of value between the parties. It can be “as small as a peppercorn”, or the waiver of certain rights; for a contract to be valid, each party has to give something that could be of value.
- Intention: for a contract to be formed, there must be a mutual desire to establish legal relations between the parties. Where the “reasonable bystander” would objectively fail to perceive sincerity among one or more of the parties to form legal relations, a contract has not been formed.
- Capacity: parties must have “capacity” to agree to be bound by a contract. The courts have held that some parties do not have or have to prove capacity to be bound by a contract. Some examples include minors, or individuals under the care of a litigation guardian. Individuals may have capacity for certain contracts or agreements but not others.
- Legality: the court will not enforce an illegal contract. For example, a contract to engage in theft would likely be unenforceable.
- Now that you understand the elements of a contract, how do you determine whether you need a lawyer to review the document you’re about to sign?
Contract Length
The longer the agreement, the more likely you should be engaging legal counsel in reviewing. While the converse is not always true (that a short agreement means you don’t need legal counsel), long agreements are a definite sign that legal counsel should be engaged.
Lengthy agreements contain more opportunities for confusion through either unclear rights/obligations, extra wordings, conflicting terms, or maybe even extraneous clauses that could be cut from the agreement entirely.
If your agreement is longer than five pages, it is a good sign that legal counsel should be considered.
Presence of Legalese
The simpler the wording in the agreement, the more likely you’ll be able to understand its terms, and the less likely you’ll require a lawyer to understand what you’re agreeing to.
Many law firms are encouraging clients to “ditch the legalese” and write in plain, easy to understand, terminology. However, some agreements have been crafted over a long period of time and use precedent language to ensure the drafter’s legal rights are protected. When longer terms and conditions, such as boiler plate clauses, or Latin terms start to creep into agreements, it is likely that you should be asking your legal counsel to review.
If you don’t understand everything you’re agreeing to – ask your lawyer!
Seriousness of Rights / Obligations
The more important the agreement is to you, the more likely you should have a lawyer look it over. This could be importance in terms of dollar amount, length of time it affects you, or even for emotional purposes. For example, a standard form personal cell phone plan agreement is less likely to require a lawyer’s eyes, while a million-dollar house purchase, or a Non-Disclosure Agreement after being terminated are likely something you’d want a lawyer to review. Nobody wants to be stuck in a contract for 20 years that they can’t change and that they regret not asking a lawyer about before signing.
If it’s important to you, it’s important that it’s being done right the first time.
Ability to Negotiate
If you’re able to negotiate terms in the contract, it’s more likely that you should engage legal counsel. Legal counsel is there to protect their client’s rights and interests. Just because there is a lawyer involved on the other party’s side, does not mean your rights or interests are being protected.
If you have the ability to negotiate, doing so with a legal professional on your side can help strengthen your bargaining position.
When in doubt – ask your lawyer!
This is not an exhaustive list, and when in doubt – ask your lawyer if it’s worth having them review a contract. Most business savvy lawyers can help you determine whether it’s economically feasible to do a contract review for your circumstances. At Nicol Law we offer fixed fees on a variety of different contract reviews. Contact us today to determine your options, or check out our transparent fee guide, located on our website.