Is Your DIY Contract Enforceable?

I get it. You probably have a degree or two. You've probably looked at a lot of contracts in your career. You probably write well. It's easy to search Google for examples of contracts. You might even have a contract from a prior deal that feels like it might fit your current deal. How difficult can it be to write an agreement? So you draft your own contract without involving an attorney. Or you sign a contract the other side drafted (without an attorney) without having your attorney review it. Maybe save your business some legal fees.

But is the contract enforceable?

Here are two traps that might make your DIY contract unenforceable:

1. The language in your contract might be too vague. For example, a contract that says the parties will mutually agree on the price (at some future time) probably is unenforceable. A contract that says the customer will pay the web hosting fees (without indicating the fees or a formula for determining them) might be unenforceable. A contract that says one party will license another party the trademarks (without listing the trademarks) probably is unenforceable. In my experience, DIY contract drafters often fall into this "void for vagueness" trap when the believe specificity is not needed because "everyone knows what they mean."
   

2. The language in your contract might be contrary to statutory or case law. A contract that sells a medical practice's patient files to another physician (e.g., in conjunction with the practice's sale of all its assets) is contrary to a Virginia statute that sets forth a required procedure for transferring patient files. A contract that prohibits an employee from working for a "competitive business" probably is unenforceable because it doesn't meet case law requirements for enforceable non-compete provisions. Likewise, a non-compete provision that prohibits a former employer from working for a competitor for 7 years after her employment is terminated is unenforceable because it also goes against established case law. A contract for the sale of a trademark that doesn't convey the good will associated with the trademark probably is unenforceable because it's contrary to law. Likewise, a trademark license that doesn't contain satisfactory (or even any) quality control provisions is contrary to law. DIY contract drafters often fall into this trap because they simply aren't aware of the applicable law.

The examples I use above all come from DIY contracts I have reviewed in the past few weeks.

Unenforceability is a big risk in Virginia because of the rules Virginia courts use to interpret contracts. A Virginia court generally looks only at the document. It won't consider outside communications (e.g., emails, texts, or verbal communications) to clarify or decipher what the parties meant. Virginia courts also won't re-write your contract for you to make it enforceable. The court's decision is usually a thumbs up or thumbs down on the contract. In addition, if the court strikes an unenforceable provision from a contract, and the contract cannot be performed without that provision, then the entire contract likely will be unenforceable. Bad news all around.

So, when you engage an attorney to draft or review a contract, you're not just engaging him or her to be a scribe, you're engaging the attorney to apply his or her knowledge and experience of the law to draft or revise a contract to improve its enforceability.

It's worth the money and the time.