Legal-Ease: How to analyze written contracts

Interests in real estate that affect the real estate for three years or more are required to be in writing. Similarly, contracts for goods that have a value of $500 or more are supposed to be in writing, specifically so that if there is a dispute about the contract’s terms, the written agreement can resolve the dispute. Most other contracts are not required to be in writing.

But, many contracts are in writing even when those contracts are not legally required to be in writing.

Any contract for which thought is involved is usually a contract for which hiring an attorney would make sense. However, it is impractical to hire an attorney to review every contract. Thus, if an attorney has not been hired to analyze a contract, there is a handful of key items every contract signer should look for in a contract. These items to consider are especially important to understand when the parties to the contract did not write the contract together (i.e. when one party writes the contract and asks the other party to sign it).

First, the terms of the contract that impose responsibilities or obligations on one party to the contract should be reciprocally binding on the other party. For instance, contracts sometimes say that if a lawsuit is filed regarding the contract, the prevailing party in that lawsuit will have the prevailing party’s attorneys’ fees paid. If one party could get attorneys’ fees paid in the event of winning a lawsuit, the other party ought to have the same chance to recover attorneys’ fees upon winning a lawsuit.

Second, watch for affirmations or representations, especially when the affirmations or representations are all or nothing. For example, if I sell real estate, the sale contract may say that I affirm that there are no environmental issues related to the property. Of course, unless I have conducted extensive environmental studies, I cannot know for sure that the property has no environmental issues. In these circumstances, the contract should say, “To the best of my knowledge, there are no environmental issues related to the property.”

Third, make sure that the parties to the contract are accurate. For instance, a family may have an LLC that owns real estate and may also own real estate in those family members’ personal names. If the LLC enters into a contract with a tenant to lease that property, the LLC needs to be the owner of the property. The people who sign the lease may be the LLC owners/members, but the LLC itself needs to be the identified landlord in the lease.

Finally, make sure that the contract is complete. If the contract says that someone will deliver something to another person on a certain day, the contract should state that delivery date. If the other party to the contract verbally says, “Although the contract includes a delivery date, we do not care if the delivery is late,” that openness to late delivery needs to be a part of the written contract.

Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at [email protected] or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.