Clients often ask me to review their contracts before they sign on the dotted line. It is a good practice to have a lawyer provide counsel when the church is negotiating a new agreement. In some instances, a lawyer can help the church steer clear of potential problems.
There are lots of issues an attorney looks for when helping a client with a new contract. We want to ensure the contract has all the requirements of a legal document. We ask the client to affirm that the bargain is correctly described in the product description or scope of work. We encourage the church to perform proper due diligence on the counterparty.
Negotiating a contract with a new party is more than legal technicalities. Church leaders should be comfortable with a vendor’s course of conduct. This means the church should be comfortable with the way this party does business.
Understanding the performance conduct of a party cannot be overstated as an important factor. I have observed that many business disputes arose because the parties’ expectations on behavior were not aligned. This often leads to feelings of mistrust, betrayal and disappointment.
Most contracts begin with friendly dealings between the church and another party. Often the church officials genuinely like the salesperson or company representative. They may find they have lots of personal interest and friends in common. This is a nice way to start a business relationship. However, there is more that should be considered.
If the church is considering a new vendor relationship, look at the terms of the contract to get a sense of how the other party operates. In other words, carefully read the fine print. This is the boilerplate language in the agreement. It could be a mistake to dismiss these clauses as standard legal talk. There is nothing standard about a contract. Every provision, term and clause matters. Here are some tips to keep in mind.
First, churches should be on the lookout for legal traps. There are lawful terms that a party may slip into a contract that could appear innocent on the surface. These terms have real consequences and can matter greatly in a dispute. If understood, one might consider the audacity of these clauses an insult. A vendor that dares to include such language may signal how they plan to do business.
Churches should ask their lawyer to explain terms that could be ambiguous. Don’t sign a document if there are any apprehensions about the meanings of the language. Contracts that are written in such a way to be vague and mysterious may be telltale signs of how the vendor treats its customers.
Secondly, most clients instruct me to help them negotiate a fair deal. My church clients are not looking to take advantage of another party. A church’s lawyer should look for balance in the transaction. If a contract gives most of the leverage to the other party, the church should wonder how further dealings will proceed.
Church leaders should be mindful that when presented a contract by an opposing party, the party’s attorney probably wrote the document. The other party’s attorney may not owe the church a duty of loyalty. Therefore, the church should approach the proposed contract with the attitude that it was not written for their benefit.
Finally, a party with whom the church is negotiating an agreement should be willing to discuss the terms. Take it or leave it contracts may signal to the church that the vendor will be unyielding later in its performance. Of course, negotiation power is a product of economics and choice. The lower the value of the contract, the less negotiable power the church has. If the vendor has a monopoly on the product or service, it will be difficult to alter the proposed contract.
Churches who take the time up front to assess the spirit in which a party will perform under a contract can reduce the risk of disappointments. Make sure your church leaders understand all of the terms of the deal.
