Wait! Don’t Sign That Contract!

I hear it all the time from my clients in Cornwall and area, “Can I get out of this [insert name of contract here]?”. People are asking about leases, guarantees, agreements to purchase a home, weight loss center memberships, you name it.

My answer is usually the same. “Well, I would have to review the agreement first.”

Some agreements do contemplate how to “get out” of the agreement, or, in legal speak, how to terminate the agreement.

If the contract says you can “get out” of an agreement before the term is up, normally you will need to have a reason (which would be set out in the agreement), or you have to give notice to the other party for a period of time, or it is going to cost you.

Most of the time there is a cost to ending the agreement early. In other agreements, there is nothing in the document that discusses ending it early. So what do you do then?

Well, you can try to negotiate with the other party, or you can stop honouring your obligations under the agreement and wait for the other party to sue you. Because that is what generally happens when you don’t fulfill your side of the bargain – someone is going to pursue you for whatever money they have lost. If it is a lot of money, they are going to sue you.

Depending on the fact situation, you might be sued successfully if you break your contract. And then you will be responsible not only for your initial obligations in the agreement, but you also might have to pay interest, and, sometimes, part of the legal costs of the other party.

Many of my clients are surprised at what their obligations are under the agreements and contracts they have signed. The problem is that they come to me AFTER they have signed the agreements. It doesn’t do much good for me to explain all of your obligations under a contract once it has been signed. I cannot change the contract for you (unless the other party would agree to amend the contract, which isn’t likely).

So, next time someone puts a contract in front of you to sign, don’t just sign it blindly.

First of all, READ the contract. It may not be what you agreed to, or you may not like the terms and want to renegotiate some items.

Secondly, if you aren’t sure what it means, ask to have a few days to review it before you sign. You can use that time to have your lawyer review it, or to look it over in more detail yourself so you can figure out what the heck it means.

I know not everyone can afford to hire a lawyer for every contract they sign, but think about what it might cost you if you want to get out of the contract. If you couldn’t handle the cost of fulfilling your end of the bargain if certain things do or don’t happen, you should get some legal advice on what it all means and also, if you can “get out” of it if you need to down the road.

I can almost guarantee that the cost of having me review a contract after it is signed to see if you can “get out” of it (and to help you deal with attempting to get out of it) is going to be greater than the cost of reviewing the agreement up front before you sign.

I can also tell you that almost every time I review a contract for a client, we end up asking for changes. Some of the things we end up changing could have cost my clients a lot of money if they had signed the contract as is. And sometimes, my clients decide that once they know their obligations and the true cost of the contract, it is not worth it, and they don’t go through with the agreement.

I recommend that you review in detail every agreement you sign. A gym membership, a lease, a loan agreement, an agreement to buy a home or other large ticket item, you get the picture.

And if you aren’t sure about what is in the agreement or what your obligations are (or what the other party’s obligations are), you should get legal advice.

This is especially important for small business owners and entrepreneurs.

I have membership programs available for clients who want to have ongoing access to legal advice for contract reviews and other issues but who are concerned about managing the cost of legal services.

If you are interested in Allinotte Law Office’s membership program, give us a call at 613-933-7720 or email erin@allinottelawoffice.com.

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Michele R.J. Allinotte is the owner of Allinotte Law Office Professional Corporation in Cornwall, Ontario and she helps her clients make the best decisions for themselves, their families and their businesses. Her practice focuses on the areas of business law, estate planning and real estate. Visit www.YourCornwallLawyer.com to get her FREE Peace of Mind Personal Inventory to make sure that your family has all the information they need.