It is widely understood that a contract is needed to start a new tenancy, employment or commercial project. Free contract templates are a quick option for kicking off these initiatives but are only a short term solution. Each project will need additional documents and types of contracts which themselves will require generating and tracking. Some projects might require custom contracts which can't just be downloaded off the internet. This article will highlight 3 reasons why small businesses shouldn’t use a one-off contract template and should instead consider longer term options such as a contract creation and management platform like Legislate even if you are unlawyered.
Contract templates need to be updated
Every legal document is a tailored version of an agreement template. Recycling templates when creating new contracts can be dangerous because contract terms vary and replacing them each time is not always a simple case of editing the values. Contract terms are highly connected which means that their values can impact whether a clause should be included or not. Even when the contract term does not have an impact on the term, editing values is manual and prone to errors.
If you are renting out your property to a tenant, chances are you will rent it out again to a different tenant at a later stage in which case you will need to generate a new tenancy agreement. The number of employment contracts you generate will increase each time you hire a new employee. Whilst it might be tempting to use the first template for the following contracts, legislation can evolve, tenants and employees might require different terms which means that your template will need updating. Including out of date clauses in a contract can expose you to risk and lead to penalties and fines.
Keeping up to date with these legal updates by yourself is risky and not worth the hassle. It is safer to rely on a third party solution like Legislate for creating lawyer approved contracts which are always up to date.
Contract templates are not easily connected to Business contracts
Most business contracts are connected which means that you need to have a workflow which makes it possible to transfer the data from one contract to another in order to avoid duplicating work. If you download a contract template for free online, you won't necessarily know if it is compatible with the other connected documents.
An employment contract is usually preceded by an offer letter and followed by compliance documents such as privacy notices. A rental agreement will be followed by a how to rent letter and later on by potential rent increases or notices such as a section 21. A consulting agreement might be preceded by a non-disclosure agreement.
As a result, it is not one but on average 3 documents you will need to generate per contract agreement which is why it is better to select a service which offers a full suite which are compatible with each other. This will guarantee that the documents correctly reference and the can be created efficiently.
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Managing contracts and compliance requirements is not easy with contract templates
Organisations of any size need to store their contracts for compliance and bookkeeping purposes. A legal contract is usually filed and forgotten after it has been signed and the chances of a specific contract being lost is even higher when the contract template was downloaded for free online. This approach to managing contracts is not ideal especially if and when a business needs to go through some audit during which they might need to present all the NDAs, service agreements and sales contracts they have entered into the past 3 years.
Moreover, contracts contain valuable data which means the contracts need to be stored in a way which allows the data to be easily queried for business insights. Some of this data concerns contract expiries, renewals, and mid-contract obligations. Other examples of key contract data include monetary figures, payment terms and deliverables. These are all important data points in the lifetime of a contract which need to be tracked. Tracking these contracts events in a calendar or spreadsheet are not optimal since they require manual updating each time a new event passes or is created.
How to create and manage custom contract templates at scale
Free contract templates are still the preferred choice because the size and frequency of the problem don’t seem to justify using a lawyer or a contract management service provider. However, this is an unnecessary risk now that easy-to-use contract management solutions like Legislate are accessible to the unlawyered and take the pain away from contracting.
Legislate offers a suite of essential contracts which are written in plain English and easy to understand. To create a simple contract on Legislate which protects your intellectual property and confidential information, choose the specific contract type you'd like to create and answer some simple questions. A custom contract will then be generated based on your answers and you'll be able to invite the other side to sign the binding contract via e-signature. Legislate then makes it easy to manage your contracts in one place and access key information about your legal agreements on any device and at anytime.
If you would like to create and track lawyer-approved contracts and their associated letters, which are always up to date, watch Legislate in action or book an introductory call. Alternatively, read our tutorials or sign up today.