I finally learned why boilerplate contracts are such a trap for small businesses

Back in 2017 I used a template I found online for a client agreement and it cost me $3,200 when a dispute went to small claims court in Austin. The problem was the indemnity clause was written for a much bigger company and I didn't even know what it meant. Now I see other entrepreneurs making the same mistake, grabbing free templates off legal sites without reading the fine print. They don't realize those templates are often written to protect the drafter, not the user. How many of you have gotten burned by a generic contract you thought was safe?

3 comments

3 Comments

the_anthony1mo ago

Free templates aren't the problem, it's people signing stuff they didn't read. A template is just a starting point, you gotta customize it for your actual business or you're asking for trouble.

claire_gibson1mo ago

Actually I used to be one of those people who thought "a contract is a contract" and would just grab whatever template was free. But yeah that "indemnity clause written for a much bigger company" thing hit home hard. I had a similar situation where I borrowed a template from a friend in a totally different industry and it had all these crazy liability limits that made zero sense for my little operation. Definitely changed my mind on just grabbing stuff off the internet.

the_thea1mo ago

Agree with you @claire_gibson, but what gets me is people forget a contract is basically a promise backed by law. If you copy someone else's promise without understanding it, you might end up promising things you can't actually deliver.