Businesses enter into contracts in their daily operations. Contracts play a crucial role in commercial transactions as they create a legally binding relationship. They protect the best interests of a business and helps businesses manage legal and commercial risks in the same.
Due to the absence of a legal services budget in some SMEs and sole proprietors, there is often a pull towards using online contractual templates that are found on Google. Online contractual templates can, to a certain extent, provide legal protection, provided that they are customised to your specific needs and reviewed by an attorney prior to signature. From our experience in practice, some SMEs do not customise the online contractual template nor get an attorney to review the same. This has resulted in costly litigation. The idea of making profits is an exciting one, yes, we agree, however at what cost? When it comes to your business, do not make a hasty decision to sign an unverified online contractual template without legal review by an attorney. Would you throw your money at any financial investment product or service without understanding the terms of such investment? If the answer is no, then likewise, you should not sign an online contractual template for your business with terms and conditions you do not understand.
Risks with signing online contractual templates includes, without limitation, the following:
– They may not be customised to your specific business needs.
– May not adequately protect your business.
– May not align with your business objectives
– Terms may favour one party more than the other
– May not adequately address your commercial risks
– The terms and conditions of the contract do not capture the intention of the parties.
– The title of the contract and the content of the contract do not speak to each other.
– Concluding the wrong contract for the business deal.
– One party can exit the contract while the other is locked in.
– Non compliance with applicable laws
AI assisted contracts
With the introduction of AI, a number of businesses are resorting to drafting their own contractual templates with AI such as ChatGPT and others. Although AI does have some benefits to it, one still needs to verify the information provided by it. Without a legal eye, you may conclude a contract that may not even be in alignment with South African laws, amongst other issues. The contract may not meet the requirements for that specific transaction. For example, the shareholders agreement concluded without legal advice, does not meet the requirements of the same and applicable laws.
Let MHM Attorneys help you!
We help SMEs, sole proprietors, independent contractors and subcontractors with reviewing and negotiating commercial contracts. If you have questions about your business contracts, send us an email to info@mhmattorneys.co.za or give us a call on 0824088884. We offer free online consultation for contract reviews.
The content in this article is for information purposes only and does not constitute professional legal advice. Please contact us for legal advice specific to your unique circumstances.
