Legal Forms Are Not All Created Equal by By Denise Annunciata

Most legal projects do not start with a blank slate. Though they typically include deal specifics, they almost always involve "core" or "boilerplate" information used by others as a starting point. From both an economic and substantive perspective, it generally doesn't make sense to draft an asset purchase agreement (or any other widely used form with many standard provisions) starting from a blank page. Nevertheless, unless you or your firm or company has compiled an expansive library of optimal starting forms for all your transactions and other legal projects, you'll need to obtain a good form. All legal forms are not created equal. That's an easy conclusion to reach when searching for legal forms on the internet. So where does one look and how does one select the right form? Here are six points to consider when determining the value of an online legal form.
No. 1: Know Whose Side Are You On Legal forms are typically drafted with a perspective towards one party or the other, usually determined by which party crafted the first draft. When you are representing an executive employee for instance, you want to be sure the intial drafting document you're starting with doesn't contain heavier protections that benefit the company. Make sure that the legal form you're assessing is drafted from the perspective of your client or at a minimum, from a neutral position. Remember, the more time spent revising or modifying a document, the less efficient you will be in completing the task.
No. 2: Navigating Negotiated Terms Many online legal forms are simply examples of negotiated documents which, though helpful, are not typically an ideal starting point. You want to be able to negotiate all of the terms and not assume that because one party negotiated to a certain result, that result makes sense for you and your client.
Negotiated terms to look for in a form you are considering will be those that (1) identify the parties, (2) set forth the general subject matter and recitals, (3) specify the rights, obligations and responsibilities of each party, (4) define the consideration (compensation or price for services/products), and (5) set forth time for performance. Sometimes, however, a negotiated form may be the most applicable to your needs. So scour the form for negotiated terms and revise them accordingly. Drafting the best agreement for your client means everything is negotiable.
No. 3: Know What Constitutes a Good Agreement A good, thorough agreement generally contains the following basic provisions (to the extent relevant to a particular purpose): (a) Identification of the parties that will be bound by the terms of the agreement (b) Recitals to clarify the parties' understanding of the agreements made; (c) Rights, obligations and responsibilities of each party; (d) Term, including the length of the initial term and whether the agreement may renew or extend beyond the initial term; (e) Consideration that the parties can expect to receive for entering the agreement; (f) Payment terms, including the total compensation, manner of payment, payment schedule, and late payment penalties; (g) Representations and warranties of the parties (h) Conditions to a party's obligations under the agreement; (i) Termination, upon what terms the contract may be terminated and the manner of termination; (j) Default/breach including conditions thereof and the rights to cure and remedies; (k) Dispute resolution, whether mediation, arbitration or litigation and the parties' respective obligations to pay for disputes; (l) Indemnification and limitations on liability; and (m) Issues of general applicability: which will differ depending upon the subject matter of the agreement. For instance, a distribution agreement may include a provision addressing export control laws, where a partnership agreement will not.
Some examples of general provisions may be: ♦ Compliance with Applicable Laws ♦ No Third Party Beneficiaries ♦ Notices ♦ Waiver and Cumulative Remedies ♦ Severability ♦ Assignment ♦ Governing Law; Venue ♦ Entire Agreement ♦ Counterpart Signatures ♦ Construction ♦ Time is of the essence ♦ Representation or Authority of Signatories ♦ Specific Performance ♦ Force Majeure ♦ Ambiguities
No. 4: Detect Defined Terms Make sure that the form does not contain defined terms that do not apply. This will typically be the case if you're starting with a previously negotiated document. Terms should not be capitalized unless they have been defined somewhere in the agreement and the definitions should be germane to your specific deal.
No. 5: Attachments, Schedules and Exhibits Your initial drafting agreement should not reference or contain schedules, exhibits or other attachments that are not applicable to your transaction and just as importantly, should contain those that are applicable. Sample forms may contain remnant references to attachments that are not applicable. Running a global search of your form for the words "attached hereto", "schedule" or "exhibit" is helpful in detecting these issues.
No. 6: Comparisons Once you've found the form you're looking for, it is useful to locate similar forms for comparison. This can give you a better sense of the strength and weaknesses of the form you've chosen to work with. The best course of action in any event is to start with the best form you can find, and refer to other forms which may not be as good overall but may have more appropriate or better language with respect to certain issues.
* Simple agreements (i.e. confidentiality) to more complex agreements (i.e. buy-sell agreements, marketing agreements, etc.) * Stockholder/director notices, waiver of notice * Draft consents and minutes including a searchable collection of hundreds of director and stockholder resolutions to expedite drafting consents and minutes. * Employment agreements and letters * Transactional closing documents (i.e. closing agendas, closing certificates) * Minute book documents (forms of minute book index and summary sheets) * Stock certificates and records (i.e. GOES forms to print stock certificates, stock ledgers)
Conclusion All good lawyers realize the value of a well-drafted agreement. No matter how good a legal form may appear, it is always just a starting point and must be revised to reflect the relevant transaction.
And the most important thing to remember: Don't be married to the form. Unless there are specific provisions required by law, statute, etc. to be included in a document, nothing is etched in stone and everything is negotiable. It is a lawyer's job to make it the best document for his or her client's needs.
About the Author
Denise Annunciata, a paralegal for 21 years, is the founder of LeapLaw (http://www.leaplaw.com), a provider of professionally written legal forms, contracts, and legal documents. She also is the cofounder of Virtual Paralegal Services, &#