When it comes to entering into a lease, or any other contract for that matter, does it matter whose form is used? Some clients believe that the better approach is to attempt to save time and legal fees by allowing the other party to prepare the initial draft of the document and to merely review it and make necessary changes. However, a recent article by Meislik & Meislik highlights the fact that the party preparing the initial draft of the lease often holds an advantage in the transaction for the following reasons:
- Setting the Framework. The party preparing the initial draft of any contract has an advantage by “setting the stage.” This means that the drafting party can establish the framework for the agreement and each provision. The other party is then left to negotiate those provisions to be more reasonable and less favorable to the drafting party. In other words, the party preparing the initial draft of any agreement sits in the driver’s seat and essentially leaves the other party to play defense.
- Missing Provisions. The party preparing the initial draft of the agreement may also omit provisions that are not favorable to its position. This leaves the other party with the task of identifying crucial omitted provisions that may be necessary to protect its interests. These provisions may be overlooked as the review may focus more on revising the existing provisions to make them less burdensome instead of identifying provisions that have been left out.
- Standard Forms. What about just using standard forms? Depending on the source of the form, in some circumstances this may be appropriate. However, many standard forms are landlord oriented. As you can imagine, trade groups representing the interests of landlords are better organized then tenant advocate groups. As such, many of the standard forms are far more protective of landlords. In other words, these “standard forms’ may provide a false impression that they are inherently “fair” which may not in reality be the case. There is still a cause for concern, especially for tenants, if the other party is proposing a “standard lease form.” Finally, standard forms are often geared toward basic and traditional situations and not well suited for more complex or unique transactions.
Although any contract can be negotiated to be reasonable and fair to both parties, the non-drafting party should be aware of the pitfalls mentioned above. If you have questions concerning your pending lease or other contract, please contact our Business Law Group partner, David A. Closson at [email protected].