Whether for business or personal reasons, everyone needs a legal document at some point in their lives.
If you are a business owner or manager, you probably use a lot of them on a regular basis. You want to make the process efficient, fast, and convenient — and that’s why you, and millions of other business owners just like you, use legal document templates. The goal is to save time, money, and aggravation.
But that convenience comes with risks.
If you’re not a lawyer, you could make a mistake or omit a provision that could lead to significant financial or legal consequences. In this article we’ll address some of the most common mistakes, how you can avoid them, and ensure that the legal documents you prepare are complete, valid and protect your interests.
Mistake #1: Using legal document templates from the wrong jurisdiction.
Many contract forms are generic, meaning that they can be used in most common law jurisdictions. But that is not the case with all legal form templates.
A warranty deed from Arizona will not work in California. A power of attorney for Ontario is not the same as a power of attorney for Alberta. Employment contracts that are valid in England may not be valid in Scotland.
It’s important to be aware of the laws that govern the type of transaction for which you are using the template form. There may be statutory requirements governing such things as:
- Specific language, terms or provisions that must be included
- The method by which a document is signed, witnessed, and/or notarized
- Procedures for filing or registering a document
- Methods of giving notice to the other party / parties
- Provisions that are prohibited, which would make the document legally invalid
THE FIX: Always ensure that the document template you are using is appropriate for your jurisdiction. It is advisable to have a lawyer in your area review it before signing, to ensure compliance.
Mistake #2: Failing to customize the template.
Proofreading is essential when drafting legal documents.
When preparing a contract or other legal document, you must carefully read each sentence and remove / replace every piece of generic placeholder text with specific details that reflect your transaction. Failure to do so could render the contract ineffective or invalid.
If you are using a precedent document (a document that someone else has used for a particular purpose), it may contain names, addresses, amounts, or other details that do not apply in your case.
If you are using a template, look for such things as text placeholders (often enclosed in square brackets or formatted as fields which can be filled in), field codes, or underlined areas or large blank spaces indicating where details are to be entered.
THE FIX: Always review your document thoroughly and ensure that it is correct before signing.
Mistake #3: Entering inaccurate or incomplete information.
Before you sign that contract, make sure all key information is complete and up to date, including:
- Legal names of all parties. If a corporate party uses a trade name to do business, ensure you use the proper corporate name. You can include the trade name by stating the name of the party as “[REGISTERED CORPORATE NAME], doing business as “[TRADE NAME]”. Ensure all names are spelled correctly.
- Key dates and deadlines. Effective (start) date, duration of contract, expiry date (if applicable), notice periods, etc.
- Governing law. The contract should contain a governing law clause, which specifies which state, provincial, territorial or foreign legal system will apply to interpret the agreement and govern the parties’ rights and obligations.
THE FIX: Same as Mistake #2. Review, proofread, and review again.
Mistake #4: Using an outdated template.
Laws and regulations change. And when they do, any legal document template that relies on those laws must be revised to incorporate the changes.
Statutory and regulatory changes are frequent with respect to such matters as employment standards, corporate compliance, landlord-tenant matters, and privacy issues.
Using an outdated legal document template can result in a contract that is unenforceable.
THE FIX: Does the document provider give a date when the document was last updated? If not, ask Customer Support. If you’re not sure whether the document is up to date, review it with a lawyer before using.
Mistake #5: Using vague or ambiguous language.
Using non-specific terms like “reasonable efforts” and “in a timely manner” without clearly defining these terms can lead to misinterpretation and, ultimately, to costly disputes.
THE FIX: Avoid these terms if possible. If you do use ambiguous terms, provide a clear definition in a dedicated “Definitions” section of the agreement. If you are confused by legal terms, this is a good time to get some advice from a lawyer.
Mistake #6: Execution and witness errors.
Legal documents must be properly signed and, where applicable, witnessed and/or notarized. In many cases, the signing parties and witnesses must also date the document when they sign.
Witnesses must meet all statutory criteria (such as being of legal age, not having a material or financial interest in the contract, etc.)
THE FIX: If you are unsure about how a document should be properly signed, talk to a Notary Public. They can guide you to ensure everything is executed in a legally valid manner.
Mistake #7: Using templates from unreliable sources.
Disreputable or low-quality legal document template sellers typically offer generic, unverified, or outdated boilerplate forms without local jurisdictional compliance, attorney review, or clear disclaimers.
Ask yourself these questions:
- Does the website inspire confidence? Is it secure? Does it load quickly?
- Is there professional oversight, i.e. are the documents drafted and reviewed by qualified legal professionals?
- Do they provide bios for their team members? Are they lawyers, paralegals, notaries, and industry professionals? Do they source their documents from legal practitioners?
- How long have they been in business?
- Is their other online content (blogs, articles, social media) timely, well-written, and professional?
THE FIX: When buying legal document templates, research the source before you buy.
Frequently Asked Questions
Are legal document templates legally binding?
The use of a template alone does not guarantee enforceability, but if the document is properly completed and executed, it will create a valid and binding agreement provided that it satisfies the applicable legal requirements.
Is it legal to write your own contract without a lawyer?
In many situations, individuals and businesses can prepare their own contracts. However, certain transactions have specific legal requirements, and professional advice may be appropriate.
Should I have a lawyer review any contract I create from a legal document template?
It is a good idea to have your lawyer review the contract before signing, if the transaction involves substantial risk, unusual provisions, or uncertainty about the parties’ legal obligations. Not every routine document requires individual legal review.
What are the risks to me and my business if I modify a legal document template?
Templates are generally intended to be customized, but be careful what type of changes you make.
Altering legal clauses without understanding their effects can introduce unintended risks. You need to understand the provisions you are changing, and you should get legal advice if you are confused or uncertain about any term or condition contained in the template.
Conclusion
Before you use any legal document template, it’s important to remember that the template is NOT a substitute for legal advice.
If you do not have a full understanding of the legal implications, any changes you make could render the document invalid or unenforceable, or could lead to costly legal disputes.
We always advise our customers to seek legal advice, especially when the transaction involved is a complicated one, involves multiple parties, and/or carries consequences that could be substantial.
Convenience is a good thing, but don’t let it blind you to the risks involved. By taking the precautions suggested above, and updating your documents as and when required, you can create enforceable legal contracts for your business and reduce the risk of future legal disputes and financial liability.
