Business Basics

Beware of the fine print in generic legal documents

- November 2, 2016 2 MIN READ

It is becoming increasingly common for Australian business owners to turn to the Internet when seeking legal information. Falsely believing that legal documents are ‘standard’ and lured by lower prices and the immediacy of information, founders are unknowingly investing in extraneous documentation that is putting their business at risk.

Though generic, downloadable documents may appear to be a convenient and economical alternative to traditional legal advice, they are potentially harmful for businesses. Generic legal documentation may not be tailored to address a company’s specific needs and leaves business owners unaware of their liabilities and therefore open to possible litigation.

As the legalese in these documents can be difficult to decipher, it is not uncommon for information to be misunderstood and irrelevant material mistakenly selected by business owners. Use of contracts that fall under the wrong jurisdiction is a common problem. For example, a Melbourne based business using contracts and agreements with terms governed by the state of California.

This makes it apparent that the information has been obtained from an unreliable source and leaves the company completely unprotected. Another error often made is the publication and use of policies that the business may not legally require, such as a privacy policy. It’s risky, as the businesses is unknowingly accepting unnecessary responsibilities and may be making false statements.

Simple and avoidable mistakes made due to misunderstanding information can create a myriad of issues for businesses from both a legal and reputational standpoint. These oversights undermine a company’s credibility and will not go unnoticed by sophisticated clients, irreparably damaging the positive reputation business owners work tirelessly to build. Additionally, costly litigation that may arise due to false claims or copyright infringements is financially and emotionally catastrophic and can destroy a business.

There is no one-size-fits-all legal documentation; every business requires tailored contracts and policies. Savvy business owners need comprehensive advice and documentation to enable them to mitigate these risks from the outset and protect their two most valuable assets; their intellectual property and their brand.

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