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Beware the “standard” Business Contract

There is a very common misunderstanding of the term “Standard” when it comes to written contracts. All too often individuals mistake the term “Standard” to signify something that has been approved and authorized by “neutral” authority and/or is deemed to be fair and equitable to both parties to the contract. Or they mistake the term “Standard” to signify something that is non-negotiable.

In most instances, none of these statements is accurate.

When asked to sign a “Standard” form, you need to take the time to: (1) understand who actually drafted the contract; (2) recognize the probable bias of the party presenting the contract; (3) have an understanding of the essential terms that should be included in this specific type of contract; (4) be able to discern what has been intentionally left out of the contract presented; (5) know what you need to have in the contract to protect your interests and achieve your goals; and (6) recognize which provisions are not favorable to your position.

One example to consider is the “Standard” form used in retail leasing. In the majority of situations, the landlord wrote the lease; the landlord only included provisions favorable to it; no terms favorable to the tenant were likely included; the landlord left out many provisions that it would not like (i.e., there is little likelihood of seeing a meaningful Landlord Default provision); no provision is included that would allow the tenant to withhold rent or terminate the lease; no provisions are included to provide use exclusivity or protections from competition; and almost all provisions are written simply to favor the landlord without mutual protections applicable to the tenant. Signing a “Standard” lease such as this will leave you in a very subservient position, with little or no recourse from arbitrary actions by the landlord. The term “Standard” here means that these are the terms the landlord wants for uniformity within its business operations, not any “Standard” of fairness to any other parties involved.

Another type is the “Standard” FAR/BAR (Florida Association of Realtors and The Florida Bar) form for residential property sales. (1) Generated by the joint efforts of the two associations, these forms represent the interests of three distinct parties: the Seller, the Buyer and, of course, the Broker. And (2) now, notice that NO ONE represented the interests of either the Buyer or the Seller when this “Standard” contract was generated. So, guess what? The only party adequately protected by that “Standard” form is the Broker. (3) Every contractual situation is unique, but this “Standard” contract form was developed in part as a compromise of the competing interests of the Seller and the Buyer, NEITHER of whom is adequately protected. (4) This “Standard” form leaves several blank lines at the end for the parties to add additional provisions. But do you know what is missing from the “Standard Contract” form that needs to be added? And which of the many “Standard” provisions need to be modified, to reflect the business deal each party believes they are getting?

When you see or hear the term “Standard” form, a red flag should be raised. Someone else’s “Standard” is unlikely to be fair to you. Hire an attorney to assist in making a critical evaluation of the proposed transaction and provide you with the input and support needed to protect your interests. Although signing a “Standard” form may appear to be a “short-cut” which saves time and money for all parties, it is more than likely that it will “short-change” YOU.

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