Do I Really Need All That Legal Mumbo Jumbo at the End of My Contract? – Transcript

[Intro Music] This is Office Talk with Annette Stepanian.

Annette

Hey everyone, it’s Annette Stepanian. And we’re here with another episode of Office Talk. I hope you guys are doing well and you’re enjoying the podcast so far. If you are, please subscribe or leave a review, let me know what you guys are liking what you don’t like, is this is really an evolving process for me. And so I am very open to your feedback.

Now today’s episode is going to be a little bit different. We’re not doing a traditional interview, we’re doing another format that I like to call the legal quickie. The purpose of the legal quickie episode is really to address some frequently asked questions that I get from others, whether it’s by email or on a webinar or at a cocktail party, I see these questions coming up a lot. So I’ll be addressing them here in these legal quickie episodes. And as the name implies, these episodes are going to be quick. They’re going to be about five to ten minutes long. So they should be a pretty easy lesson. If you have a question that you want me to address in a future legal quickie episode, head on over to annettestepanian.com/qanda. And that’s spelled out. So it’s q a n d a.  And there’s a form on there, you can submit your question, and maybe I’ll address it in a future episode.

Before we get started, I do have to let you know a little disclaimer. Anything that we discuss that’s legally related here is basically for your informational and educational purposes only. It doesn’t create an attorney client relationship between me and you. And don’t just go off of what we talked about in this episode. If you have a specific question, make sure to contact a lawyer who’s authorized to practice law in your state because the rules are going to vary from state to state and based on your particular circumstances.

So now that we have that disclaimer out of the way, I wanted to address a question that comes up a lot. A lot of what I do is try and get entrepreneurs and creatives to get their contracts in place. Because I see a lot of folks who are running their businesses without contracts, or ones that I think are not sufficiently adequate to protect them and their business. I can talk forever about contracts. But my question here today that I want to address is, is there a specific number of pages I should have in my contract? And do I really need all that legal mumbo jumbo at the end of a contract?

I get that you want to keep your contracts short and simple and easy to understand. I get that you’re worried that your clients might be scared off, if you present them with a five page contract that’s in Times New Roman 10 size font, I get it. And I think there’s something to that you do want to make your contracts user friendly. You want to be knowledgeable about your contracts. So if a client or a customer has questions, you’re able to confidently answer and address those questions. However, I don’t want you to sacrifice substance for form. Don’t delete certain language out of a contract just because it doesn’t look nice. Or you want to make sure you squeeze everything into three pages.

I want to talk about some of the boilerplate language that comes usually at the end of a contract. And some of the terms and why they’re important. Boilerplate provisions are usually a whole bunch of maybe like five or 10 paragraphs that you might see usually at the end of a contract, maybe under a miscellaneous headline or something like that. And they don’t really have a lot in common with one another, except that they don’t really fit anywhere else in a contract. So we tend to kind of group them together at the end. It’s really tempting to delete them, as I mentioned before, because they might add extra pages to your contract. But these terms are really important.

So let me run through some of the ones that you most often will see in contracts. One of them is called force majeure. And it basically means if there is some sort of unforeseeable circumstance, so for example, there’s a hurricane or there’s some sort of natural disaster or something so extreme that it prevents you from performing your obligations under a contract, then you’re kind of forgiven for it. So you’re not going to be held to be in breach or in quote, unquote violation of your contract because this unexpected, unforeseen, unpredictable event came into place and prevented you from performing.

So for example, let’s assume you’re a destination wedding planner, and you have a wedding that you’re coordinating in the Bahamas. And let’s say we get attacked by aliens, and you’re not able to go to the Bahamas, because there’s this attack by aliens and all the airports are closed. I don’t even know why I use the alien example. But I just want to give something extreme to make my point. So let’s say you’re not able to go to the Bahamas in order to plan this wedding. The fact that you’re unable to perform your services under the contract, which was attending this wedding in the Bahamas and doing the wedding coordination of the day of the wedding. They’re kind of excused in a sense because you’re in inability to perform the contract was due to something outside of your control.

Another boilerplate provision is one that’s called waiver or something to that effect. Basically, this permits the parties to a contract to give up the right to sue each other for breach of a particular provision of an agreement without giving up any future claims regarding that same provision. Okay. So what does that really mean? Let’s say you’re a graphic designer, and your clients are required to pay you the first of the month, or else they’re going to be charged a late fee. The client on the first month fails to pay on the first of the month. So you say, okay, you know, I’m gonna forgive it this time, because you know, we’re still kind of getting in the swing of things. So totally cool, I’m not going to charge you a late fee. Well, what happens if the second month, they’re also late, if you go ahead and charge a late fee, your client can come back and say, “wait a minute, you failed to enforce the late fee provision the first time around so therefore, you shouldn’t be able to enforce it the second time around.” By having a waiver provision, you’re saying anytime I don’t enforce a right that I have under the contract, it doesn’t prevent me from enforcing it again in the future.

Severability is also another one that comes into a contract. This permits a court to sever or take out an invalid or illegal provision and still keep the rest of the agreement intact. For example, let’s say you have a contract, and it includes some sort of illegal provision. So let’s say you have a non-compete clause in there and that has been held to be illegal in your state. By having a severability clause, what the judge will do is then take out that illegal provision, which in this example is that non compete clause, and then interpret the contract assuming as if that invalid provision was never there. So that’s super important to have as well.

And finally, there’s a provision called a choice of law and or jurisdiction clause. So they’re technically two different ones. The first one is choice of law. This provision says which state’s rules and laws are going to govern the interpretation of this contract in the event of a dispute.

Now, a jurisdiction clause is a little bit different, that one identifies in which state and county, a lawsuit must be filed. So it’s going to dictate the venue in which a lawsuit or a dispute is going to be resolved. Now, most people are going to choose a venue or a jurisdiction that is easily accessible to them. So if you have a business in Los Angeles, then you’re probably going to pick a jurisdiction clause that says that any dispute is going to be resolved in Los Angeles County, California. The reason for this is it’s a lot easier for you to access, let’s say you do go to court, or maybe you’re going to mediation, it’s much cheaper for you to go somewhere that’s local than it is to fly to a different state.

So there you go. These are just some of the boilerplate provisions that you want to be aware of and really understand before you’re tempted to delete them out of your contract. If you have more questions or you want to learn more about contracts, head on over to my website at annettestepanian.com, where you’ll find contract templates, video trainings, and much more. All about contracts and business and law and all that good stuff. I hope you enjoyed this legal quickie episode. Again, if you have any feedback for me, please leave a review. Please subscribe or head on over to annettestepanian.com/qanda to let me know what you think. I really appreciate it and I can’t wait to talk to you

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