The Truth About Contract Templates: Good, Bad & Ugly

HubSpot Video

Did you know the dangers of off-the-shelf contract templates from online sources?

Small business owners don’t always feel they have the budget to hire an attorney, especially when they can find contract templates online for free. 

These resources may seem like an obvious solution for finalizing your important deals, but relying on a one-size-fits-all contract template may actually expose you to more risk, not less.

Keep reading to learn the pros and cons of contract templates and why you need to think twice about using them.

What Are Contract Templates?

Contract templates are generic contracts that you can download from an online site and customize for your business.

Many websites have sprung up over the last few decades, offering contracts for different uses and industries. Some are free. Others are offered at a nominal price.

Sounds like a good resource for SMBs, right? Not necessarily.

While having a generic contract is better than nothing at all, these templates present inherent risks that should be avoided if at all possible. We’ll talk more about these risks in a minute, but first...

What’s the Appeal of Contract Templates?

Contract templates seem to save time since they’re just a quick Google search away. They provide standard clauses and allow you to fill in the blanks to make the contract fit your business needs.

They’re also available at no or low cost, making them popular with cash-strapped startups. 

But what seems like a smart time and budget saver could end up costing you more down the road.

The Truth About Contract Templates

Let’s dive into three hard truths about contract templates that reveal why they could be dangerous to your small business.

1. Template quality is questionable at best

Contract templates are written generically. They have to be, so they can apply to the widest range of use-cases and businesses. But their goal isn’t actually to protect your business. It’s to get as many downloads as possible. 

This is important: A contract template isn’t created with your business needs in mind. It may have been drafted for an entirely different business or industry. It may even have been created for another region or country. 

When it comes to contracts, specificity and precision are paramount. Using a template that’s not created for your unique business exposes you to unnecessary risk.

2. Contract templates use more resources than you think

Sometimes it’s faster to build from scratch than to fix someone else’s work. This is especially true when it comes to contract templates. 

Building from the ground up may actually save time while giving you custom-designed terms that fit your business's contract needs.

Whether you’ve hired an attorney to draft your contract or are doing it yourself, starting from scratch is a smart strategy. Struggling to adapt a contract that’s not designed for your business is not the best use of your valuable time. And if you’re using an attorney, excessive time spent updating a template leads to higher costs.

Creating an original contract also lets you standardize terms. That means you’ll spend less time adjusting contracts down the road. It also lowers your risk levels if counterparties push back on legalities or want excessive changes to common terms and conditions.

If you’re considering using a contract template, carefully evaluate it for use now as well as in the future. You may find it’s best to create your own from the start.

3. Many contract templates are outdated

This third truth is particularly dangerous to your business. Laws can change quickly. Many contract templates you come across are not up-to-date. In some cases, templates are so outdated, they don't reflect the current market, even when it comes to general commercial terms. 

Online privacy law is an area where contracts can become outdated almost overnight. But there are other laws and regulations that change rapidly as well. This is why it’s crucial to have a trusted source for reliable, up-to-date legal information as the foundation for all your business contracts.

As a small business owner, relying on contract templates is like going white water rafting with a life jacket that’s the wrong size. One upset, and you could find yourself struggling to stay afloat. Thankfully, you have choices when it comes to your contracts and risk management program.

So What Are Your Options?

When it comes to small business contracts, you have three options.

Do It Yourself

If you have some expertise with contracts, you could write your own contracts. You know your business better than anyone and may be able to identify your biggest areas of risk. 

Be aware, though, you’ll need to stay current on regulations related to your industry and contract law in general — and that can take a lot of time that could be better spent on other tasks.

Hire an Attorney

Another option is to hire an attorney who specializes in your industry or the types of contracts you need. An attorney can draft custom contracts that address your unique needs. 

While effective, this can be an expensive option that doesn’t always fit into small business budgets. Plus, attorneys review contracts through a legal lens, and often overlook other types of contract risks

Use Delino

Delino is a smart content review platform designed specifically for small businesses. It’s your one-stop source for identifying, prioritizing, and managing risk — including contract review. 

With Delino, you can get a deep review of third-party contracts and your existing templates. If you’ve drafted your own contracts over the years, this is an easy way to review those contracts and find the gaps that leave you exposed.  

Delino not only tells you how much risk a contract exposes you to, it gives you attorney-approved language that you can use to improve the contract terms. And it doesn’t just review the existing clauses. It alerts you to any missing clauses that raise your risk levels.

Take the Contract Template Challenge

If you’ve been relying on downloadable contract templates, it’s time to rethink your strategy. Generic templates seem convenient, but in reality, they expose your business to numerous risks.

Using a risk management solution such as Delino, you can manage risks while accelerating growth. And isn’t that the point? 

Put your business in a stronger position. Take the contract template challenge…

If you’re using a contract template, upload it to Delino and see how it stacks up. Delino will give you a risk score from 0 (worst) to 100 (best).

Update your terms with Delino’s recommended changes, and see how much you can impact your risk score.

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DISCLAIMER: Delino is not a lawyer and makes no warranties that its advice will protect your business from lawsuits or damages. Users rely on contract feedback at their own risk. Please consult your attorney for legal advice.