Rafe Needleman wrote a review of Agree2 today: Agree2 creates binding legal documents that won’t hold up in court
I am proud of his comments about the technical aspects of the site, however the title about the legal documents that not hold up in court I find problematic. That said, I am really glad Rafe brought this up. There are plenty of myths and misunderstandings about this.
Technically, I have no beef with the service. I think it’s pretty cool, actually. But although I’m not a lawyer and even though I hate trying to decipher legal agreements when I need to, the service’s tacit encouragement to create my own non-lawyer-approved agreements scares the bejeezus out of me. Sure, I could write an agreement between me and someone I’m hiring to re-wire my house. And if the contractor I’m working with were new, he or she might even sign it. But it would still, probably, be a crappy agreement. A court might agree that the electronic edits and signatures were binding, but that doesn’t mean the agreement would be legally sound. Certainly it wouldn’t be complete.
I object to the title
Saying that Agree2 agreements don’t hold up in court is like saying agreements written in Microsoft Word, don’t hold up in court.
Agree2 is a media and a framework for you to write agreements. We take care of all phases of the contract from drafting, versioning, inviting and legal binding acceptance from the parties. We provide evidence as Rafe points out in a very easy to use manner and allow you to come back and find your contracts in the same place 2 years later.
We hope to foster a community of people to share contract templates. People have already been doing this for many years, informally emailing word documents around.
Due to California law, we can not take an active part in analyzing the contract text. However we try to provide as many tools as possible for this to be easy for you and your advisors to do.
The OAuth standards group recently used Agree2 to create their OAuth Non-Assertion Covenant and Author’s Contribution License. This has been signed by amongst others Digg, Twitter, Google and AOL. I am sure Google’s legal department would not allow them to use Agree2, if they found a problem with it.
Contracts are not between your lawyers, they are between the parties
A common misunderstanding about contracts is that they have to be scary legal documents written by lawyers.
First of all a contract is not the document itself. It is the concept of an agreement the two parties have. The written contract is a handy document that writes down the terms of the agreement in such a way that there aren’t misunderstandings of each parties duties.
We perform contracts everyday. Many of them through our actions like ordering a meal in a restaurant others written like signing a credit card slip or accepting a user agreement.
Generally speaking it is a good idea to write contracts into a document to avoid disputes in the future. This is the whole reason behind writing a contract down. Avoiding disputes. If a dispute should happen in the future this document is used by a dispute resolution institution such as arbitrators or courts.
Opaque legalese is all about fear and power
When I have had to sign long contracts in the past, I can be pretty certain that the person giving me the contract doesn’t understand it one bit. They expect that I don’t understand it either. These contracts still serve their purpose, by keeping us both too frightened to cause a dispute.
That said disputes still happen, and they happen mostly because there is some disagreement between the parties about what The Party of the First Part or some such legalese foolishness actually means. (See more)
Courts are used to standard legalese terms, that is true. There are complex hidden meanings between these. However they are also perfectly able to understand plain English. More importantly if you write your contract in Plain English yourself you are probably less likely to end up in court in the first place, because you and the other party both understand your duties under the contract.
Lawyers are needed for many things
There are definitely cases where you want to bring in lawyers. I think it’s definitely a good idea for large complex contracts. Please do NOT write up a term sheet for a large investment yourself. However in most cases it is a good idea to write the meat of the contract yourself and then have a lawyer go over it. You can then use this a private (or public) template within Agree2 and have the best of both worlds.
However it doesn’t make any sense whatsoever to have pay $400ph for a lawyer to go over a contract worth $500 to you. If you are doing this repeatedly have him go over your template.
Many contracts that should be documented end up being agreed over a phone or in a brief email instead to avoid the hassle of form documents and lawyers. Agree2 gives you a much better option than either.
We are planning a feature in the future where you can give lawyers access to review your contracts and templates.
Most contracts can and should be simple. There are however a few types of contracts where complexity is mandated by law. In particular apartment leases and employment contracts, where just about every state/country have specific legal requirements.
I have written extensively on this before Contracts are relationships with strings attached, Pragmatic Contract Law for entrepreneurs and Understanding and Preparing for Jurisdictions
Wikipedia on Contracts is also a great resource. Finally talk to your lawyer. Also remember that I am not a lawyer myself.