Business Resources

Standard Form Contracts: Tips and Myths

By: AllBusiness.com

Computer data is one of your most precious business assets. Unfortunately, it's also one of the most fragile. Most computer users know that they're supposed to back up their data, but how many of us bother to do it? It takes time and discipline to follow a regular backup schedule, and it's easy to tell yourself that nothing bad is likely to happen. No one really believes that a disaster will ever strike them.

Expect the Unexpected
"I've had a few clients who've lost everything because they didn't think they ever would," says Eddie Codel, a systems engineer in San Francisco. "You can never be sure tapes have actually done their job until you need them to save you. That's usually when you find out you're screwed."

A large Chicago advertising agency lost almost everything shortly after moving into their new office space. Their still-embarrassed systems administrator remembers, "We'd been in our offices about a week, and the cleaning staff was leaving for the night. They flipped a switch on their way out. It wasn't until the next day that we realized this seemingly innocuous switch in a hallway turned off everything in the control room. We did have backups, but some machines were set to back up only once a week. For a creative agency, losing a week's worth of employee ideas is a real blow."

Save Early, Save Often
Systems administrators probably know more about computers than anyone in the office, but the best of them don't pretend to be able to fix every problem. Ultimately, it's up to your employees to know how to protect themselves against computer crashes.

An independent systems consultant (who wishes to remain nameless) recently ran into this problem at a San Francisco-based architecture firm. "Many of my clients assume that I know all about the software they're using," he says. "For instance, one client came to me after a large part of their contacts database had been lost."

"As it turns out, an intern had been entering information from business cards and checking email at the same time, toggling back and forth furiously," he says. Apparently, the calendar software saved every 10 minutes, but because the intern was creating so many new files, the regularly scheduled save was suspended because something was being added to the database. When the intern's computer froze, all was lost. "The company was not happy to learn that this isn't the sort of thing I can bring back," he recalls.

Paying the Price

What are your options if a computer dies with your precious data locked inside of it? Some businesses send a melted and marred machine out for possible data recovery. Technicians can take apart a disk drive and restore lost data one byte at a time, but only at a steep price.

"The people that really make out on backup problems are the disk recovery companies," says Codel. "Most charge $1,000 to $2,000 just to look at a dead hard drive. And there's no guarantee they can do anything for you." That's a high price to pay for a problem that could have been prevented.

Education Is Everything

Although it's vital for a system administrator to install remote backup software, it is just as important that your employees know how to use it. Companies should never assume that just because their employees know how to make spreadsheets on a PC they also know how to make backup copies of their files. Teaching new employees about the company's backup systems and reinforcing the idea that they must take responsibility for their own data is the best insurance against irretrievable losses.

Just as it has with almost everything else, the Internet is revolutionizing backup procedures. These days, you can back up your data onto an online sever from wherever you have Net access. It's fast, easy, and usually free -- and workers don't need a network administrator to help them.

Even so, the systems administrator from Chicago warns that when it comes to backup issues, good intentions aren't nearly enough. "We don't think about how human error or even unknowing misuse can interfere with our safety net," he observes. "It's a false sense of security -- unless you're sure that employees know how to use backup procedures, and that they actually do use them."

AllBusiness.com operates one of the Web's premier business sites, providing practical information and services for business professionals and growing businesses. See more at www.allbusiness.com.

By: AllBusiness.com

Standard form contracts play an important role in business. They're useful to the extent that they simplify routine transactions. But they're a nightmare to the extent that the wording often appears in eight point type printed in a half shade of gray on paper so thin you can read both sides at once. You often need a photocopier to enlarge the words and a legal dictionary to translate them.

It can be a daunting process that makes you want to throw up your hands in frustration. Yet you usually don't because your take solace in the fact that the agreement is "standard." You know that to be true because that's what their representative told you.

"It's standard" is a phrase we often hear in business. Exactly what does that mean It sounds comforting, but if you're not careful it can often amount to little more than a false security blanket.

Myth #1: All standard form agreements say the same thing. Not true. They don't. If you were to compare a few sales agreements side by side, for example, you would discover differences in warranty language, indemnity language, and more. The disparities would probably surprise you. Sometimes the differences will little impact in terms of real risk or hidden costs. But sometimes they do and the disparity can be significant enough to change the value of the deal.

Myth #2: Standard form agreements treat both parties fairly and equitably. This myth is a corollary to Myth #2 and is also untrue. Different standard form agreements will certainly contain many of the same concepts, but they don't necessarily treat the concepts the same way. Furthermore, it's not uncommon for large companies leverage their perceived market power in standard form agreement and make them lopsided.

Let's take a look at a recent example. In a lawsuit filed earlier this week, Trump Plaza is seeking to evict The Trump Corporation, owned by real estate mogul Donald Trump, for withholding rent in April and May totaling close to $87,000. Mr. Trump is usually the landlord. In this case, however, his business is the tenant.

According to Andrew Perel, the president of the Trump Plaza co-op, one of Mr. Trump's internal lawyers used the Trump organization's landlord-friendly, standard form lease and -- you guessed it -- just filled in the blank that said "tenant" with The Trump Corporation.nbsp; the rest of the form language stayed the same.

The suit alleges that under the lease a default in rent payment must be cured within twenty days of receiving written notice of a breach. Based on The Donald's past track record in court his organization will no doubt mount a vigorous defense." But until the case is resolved, it looks like The Donald's business is getting a taste of his own standard form medicine.

So the next time someone tries to tell you a contract is "standard" it may be worth the time and effort to read it and decide for yourself. What's "standard" for someone else may not be "standard" for you.

Look for contract provisions that could represent hidden costs or risks, like the default and cure provisions in the Trump lease. Ask yourself, for example, whether the time to cure is sufficient. How quickly you could find other premises and move in before finding your business on the street. Work through the mechanics of you would perform under the contract terms and whether you'll be able to meet the terms in practice. Then don't be afraid to negotiate a more reasonable timeframe.

It's always easier to negotiate contracts in the beginning of a relationship. Bargaining power shifts once there is a contract default because the rules of the transaction have already been agreed to. That's why when it comes to contracts, you want to make sure that the promises you make are the promises you can keep.

AllBusiness.com operates one of the Web's premier business sites, providing practical information and services for business professionals and growing businesses. See more at www.allbusiness.com.

Related Articles
Should I Buy Windows or Apple Computers for My Company? Is Cyber Monday an Accurate Barometer of Holiday Retail Sales?

Business News