Properly prepared form agreements are intended to be used in limited and generally routine transactions. However, the use of the wrong form or the improper use of the correct form can strain or end relationships and lead to lawsuits.

The more specialized a transaction and the greater a party’s stake in the subject of the contract, the greater the attention to detail should be and the more likely that consideration should be given to professional drafting of the agreement by an attorney.

Whether a transaction is large or small, consider the following before signing a pre-printed form agreement.

Remedies for termination

Most form agreements favor the parties who suggest them.  This is true whether that party is the landlord, or the seller of goods, services or other property.

For example, form contracts often describe in detail under what circumstances a tenant breaches its lease and how the landlord’s damages are calculated, but often do not reciprocate.

Resolving disputes

Similarly, some form contracts, particularly those prepared for and repeatedly used by a particular enterprise, often contain a provision explaining where and how disputes can be litigated.

Where they exist, those provisions almost universally favor the party presenting the form agreement.  For example, they may require lawsuits to be filed in courts geographically or otherwise favorable to that party, often at added expense or inconvenience to the other party.

When faced with such conditions favoring the other party, consider whether the benefits otherwise received under the contract are worth the burden of those provisions.  If not, you need to consider not entering the deal, making addendums to the form, or not using the form.

Confusion over revisions

Another area where a problem occurs is when multiple pre-printed form agreements are used during negotiations. One party adds terms to a blank space provided on the form. On successive forms, those terms are modified, supplemented or removed.

When the negotiations are complete and both parties believe that they have an agreement, rather than using a clean form and jointly filling in the added terms, an earlier marked-up version of the form is often used. This sometimes results in a term or condition not reaching the final signed contract, despite one party believing it is still part of the agreement.  It may not be.

“Entire agreement” provisions

Many form agreements contain wording that suggests that the subject of the contract is offered “as is” or that the written contract contains “the entire agreement of the parties.”

There are exceptions to most rules and expensive litigation might be able to prove those provisions are not the final say on the issue.

However, if your form contract contains those types of provisions, make sure your agreement is complete before you sign it.  Often courts, including those following Ohio law, will not allow parties to discuss agreements which allegedly occurred before the contract was signed and which are different from terms on the same subject contained in the contract.

When properly used in the appropriate circumstance, form contracts can provide a convenient method to memorialize the specific routine transactions for which they are intended.

Before signing a form contract, make sure it clearly recounts your understandings and expectations.  If it does not, take proper steps to obtain a written agreement that minimizes the potential for heartache and litigation.

John T. Dellick is an attorney in the Salem office of HHM. He can be reached at jdellick@hhmlaw.com or at (330) 744-1111.