When it comes to high-value transactions, it may seem convenient to use standard-form contracts. These pre-drafted agreements are often used for common transactions like renting a car or signing up for a service.
However, in larger deals involving significant sums of money or long-term commitments, relying on a one-size-fits-all contract can pose serious risks.
What are standard form contracts?
Standard-form contracts work to cover general scenarios and may not take into account the specific needs or conditions of a particular transaction. These are useful for most transactions as they remove the need to draft a new contract for every minor agreement. The exact contents of the contract vary from state to state. In Pennsylvania, they have the PAR Form Agreement as a form of a standard form contract.
The downfalls of standard form contracts
However, for high-value deals, this lack of customization can lead to misunderstandings or disputes later on. Important terms such as payment schedules, performance requirements, or unique contingencies might not be clearly spelled out, causing unforeseen issues in the future.
Avoiding contractual issues
Because of the standardized nature of these contracts, the terms are often designed to favor one party. This is most often the case if a business or organization with more power drafted them.
Safeguarding high-value transactions
In high-value deals, relying on standard-form contracts can expose parties to significant risks due to their lack of customization. Taking the time to tailor agreements for each transaction ensures clarity and fairness, helping to prevent future disputes or complications. Prioritizing a well-drafted, specific contract can offer better protection and long-term peace of mind.