A Good Contract Means Never Having to Say "I"m Sorry."
Non-lawyers, heck, even a lot of lawyers seem to hate contracts. But a contract is just a story. It's a story about what is supposed to happen if everything works our right; and also a story about what should happen if something goes wrong. Let's build a contract.
Sue is going to build a house for Mike. Mike is going to pay $1,000,000 for the house. Right there, we have the most basic contract. "B-b-b-ut," you say "that leaves out a lot of stuff. You can't have a contract like that." See, you already know a lot about contracts. You can see that will cause problems as is. Can sue build a 1 room log cabin? Where is the house going to be? So what do Sue and Mike know.
Contract, version 2: "Sue is going to build a house for Mike, and Mike will pay $1,000,000 for the house. The house will be on the lot owned by Mike on the corner of 2nd Street and Main in SmallTown. The house will have at least 4 bedrooms, 4 1/2 baths, living room [insert more description of the house here" There, now you have a basic contract with some details.
Anyone who's lived in a house can figure out a lot of the additional details the contract would need. But you get the process, right? It's easy to see that the more details you have the better.
But wait, let's say Mike doesn't quite know what he wants? Or isn't sure if he will have the money. Just look at things chronologically. What are the things Mike needs to know before making up his mind? Well maybe he needs to know if he can have a small guest house on the property, in which case the main house only needs 3 bedrooms. So you might put in there "Sue will find out about whether a guest house can legally be built on the property and then will draw up some plans, after which she and Mike will agree on the details of the house."
Or if he needs to talk to the bank, you'd say "Mike will have 2 weeks to confirm funding." But wait - what if Sue has already put in 2 weeks worth of work. That's easy "Mike will put down $5000 so Sue can start working, and if Mike doesn't get funding he can cancel this agreement but Sue gets to keep the $5000."
So, if it's so easy - why go to an attorney? After all, you probably know more about your business than an attorney does. Well, sometimes there are legal issues that will make your contract invalid. And non-attorneys tend to not think of all of the "What ifs" like "What if Mike doesn't make an interim payment, does Sue have to continue working anyway?" or "What if Sue finds gold on the property when she starts digging the basement?"
Finally, the closer you get to a transaction, the more difficult it is to see what an outsider would have to know to understand it. You and the person you're contracting with know the subject so well, you often abbreviate your thoughts. Having an outsider put it all down in full sentences will often force the parties to think about things more clearly.
Some industries don't use written contracts at all; some use industry standard pre-printed forms. But if you're providing goods or services in a similar manner multiple times, it would be well worth your while to check with an attorney and get your story told properly. Getting the basic terms that you will want over and over again, written clearly will save you time and money in the end. And even if you're the "little guy" who often has to accept the big company's standard form, it's often possible to have a few of your custom terms inserted - just to make sure the story is clear.
