Contracts, Legal Agreements and Documents: The Most Important Thing You Need to Know.

06 May

Posted by admin as Contracts and Legal Agreements

For all of us non-lawyers, getting a simple answer to even the most basic legal question can be as difficult as it can be (very) expensive. I don’t know if it’s because attorneys are paid by the hour or they’ve taken some sort of secret oath like a magician not to disclose the secrets of their trade, but sometimes it feels like there’s a conspiracy to keep the rest of us from being able to deal with our basic legal needs more simply and less expensively when it’s reasonable and appropriate to do so. There’s no way in today’s world that any of us can avoid getting involved with contracts, legal agreements and various types of documents. So, when we need to formalize a commitment or agreement involving one or more individuals and/or business and other entities, what is most important to us is that at the end of the day all parties involved will do what they agreed to do - either voluntarily or because the courts will force compliance. That being the case, the number one question we usually ask before deciding whether to create the written agreement ourselves, use a pre-created form or hire an attorney is “will the contract document or legal agreement be legally valid and enforceable?” That sounds like a pretty easy question right? Not a chance!

My interaction with the legal community began while I was still in college at Auburn University and I got a part-time job as a paralegal doing title work for a law firm near campus. Although I had had some paralegal courses in school, I received my practical training from both a junior lawyer and an experienced paralegal from the law firm. The quality of my training was night and day, depending on who was doing the actual training. Whenever I asked the attorney direct questions about what actions I should take when certain events occurred during a title search, I would get a lengthy lecture about ALL the possible things that could have happened to lead to these events, his opinion of the appropriateness of the legal actions that possibly lead to the events under discussion and yada, yada, yada. The only thing that was usually missing from his lengthy response was the actual answer to my question, answers that I needed to do my job. For real answers and meaningful training, my time was much better spent with Anita, the paralegal, who needed to get me trained as soon as possible as well as to teach me to complete the searches fast, fast, fast because the clients paid a set price for each search rather than by the hour

In the decades since I worked as a paralegal, I have hired countless attorneys while working as head of investments for a life insurance company and, in more recent years, as owner of my own investment firm. From time to time I have asked many of these attorneys what makes a contract, legal agreement or document ‘valid and enforceable.’ Until recently, the responses I have gotten over the years have reminded me of the responses I used to receive from the junior lawyer in Auburn in response to my questions - lots of talking but no meaningful answer. Finally, just a couple of years ago, a highly regarded and newly retired attorney who specialized in contract law answered that question by telling me the following:

- If he were given three agreements, one written collectively by the Justices of the U.S. Supreme Court; one is a pre-created form and one is written in crayon by the parties to the agreement, he couldn’t proclaim ANY of them to be valid and enforceable. He explained that that was because determining whether a contract, legal agreement or document is legally valid and enforceable is the role of the courts as the issue is only relevant if one of the parties to the instrument or a fails to abide by its terms and another party takes them to court or some other party “with legal standing” challenges its validity.

- No matter who creates a document, legal agreement or contract, any of the parties can challenge any part of it in court for any reason.

- The more ‘plainspoken’ and clearly written any such instrument is, regardless who created it, the greater the chance that the court will enforce its terms if they are challenged.

- As long as the parties to any document, legal agreement or contract choose to comply with its terms and conditions, the matter of enforcement or validity isn’t relevant unless challenged by an outside party because the instrument deals with a matter that is contrary to public policy. The example he gave me was in connection with a common employment contract used in the 1800’s between a manufacturer and an orphanage in which the orphanage agreed to provide 50 twelve year olds to work at the manufacturing company each year. Once the child labor laws were enacted, the contract became automatically voided even if neither party to the agreement objected to its terms and conditions.

Now that I understand that paying an attorney to draft simple contracts and agreements is no silver bullet and the premium you pay in no way assures the parties that the instrument is “legally valid and enforceable”, I have not only been much more willing to use pre- created contracts and legal agreements but I have also been more willing to create my own very simple agreements and authorizations when the circumstances seem appropriate, especially during these difficult economic times so I can save my legal dollars for more complex matters.