The “Standard” Contract Trap
Do you read everything you sign? If not, which documents do you read? Which ones you don’t?
Sometime ago, I was reading a partnership agreement. They told me that it’s their “standard” agreement. In the 4th page at the bottom, it said that everything I bring to the table (including work that predates the agreement) would be their property, from the signing date onward. So, I would need to ask their permission to use my ideas and tools, even after our partnership is dissolved.
The detail was buried in a list of generic clauses. It was too one-sided. I reacted negatively. Their answer was: “You’re the first one to object to that. It’s our standard agreement. So, everybody signs it immediately.”
They removed the clause after my objection. But this episode led me to reconsider my enthusiasm about a possible long-term partnership, which ultimately didn’t realize.
Standard vs. Draft
It’s impossible to live a life without signing contracts. One cannot have a bank or social media account without mindlessly agreeing to lengthy documentation full of hard-to-understand paragraphs.
But especially for partnerships and collaborations, if I hear the words “standard” when considering a contract, I pay extra attention to all the details. This is a decision with uncertain long-term consequences. There’s rarely anything standard when two parties join forces to create value together.
One remedy to this is to embrace the notion of “draft” instead of “standard” when producing a partnership document to be considered by another party. It still reveals the preferences of the producer of the contract, but it encourages an amicable discussion on various relevant issues rather than bitter disagreements.
