What Are Standardised Contracts?
A standard form contract is a pre-written contract that is used repeatedly in a variety of contexts. It is a standardised agreement that is used between two parties to govern their relationship and set out the terms and conditions of their agreement. These contracts are designed to be non-negotiable, efficient, cost-effective, and yet flexible enough to be used in a wide range of situations.
Where Are Standardised Contracts used?
Standardised contracts, or standard form contracts, are widely used in a variety of industries and business transactions due to how convenient, efficient, and cost-effective they are. From employment agreements and rental contracts to software licenses and service agreements, standardised contracts play a vital role in modern business practices.
Here are a few examples of when standard contracts are used:
Standard form contracts are often used in non-disclosure agreements (NDAs) to ensure that confidential information is protected and not disclosed to unauthorised parties.
NDAs are commonly used in business transactions to protect sensitive information, such as trade secrets, intellectual property, or financial information. Standard form NDAs provide a convenient and efficient way for parties to establish a confidential relationship and to set out the terms and conditions of the agreement.
Check out our Ultimate Guide to Non-Disclosure Agreements here to learn more about NDAs and how they allow businesses to keep working on innovative ideas and processes without them falling into the hands of their competitors here.
Terms of Service Agreements
Standard form contracts are widely used in service agreements to establish the terms and conditions between a service provider and a customer. These standard form contracts typically set out the scope of work that the service provider will perform, the payment terms, and the expected outcomes.
It also outlines the responsibilities of each party and the procedures for resolving disputes and terminating the agreement. The use of standard form contracts in service agreements offers several advantages, including efficiency, cost-effectiveness, consistency, as well as flexibility.
Standard form contracts are often used in non-compete agreements, which are agreements between an employer and an employee designed to restrict the employee from competing with the employer after their employment has ended. The standard form contract sets out the terms and conditions of the non-compete agreement, including the scope of the restriction, the duration of the restriction, and any exceptions or limitations.
For example, a standard form contract might state that the employee is restricted from working for a competitor in a specific geographic area for a certain period of time after their employment has ended.
Using standard form contracts in non-compete agreements makes the process of negotiating and entering into a non-compete agreement quicker and more efficient. By using a standard form contract, employers can ensure that their non-compete agreements are enforceable and that their confidential information and trade secrets are protected.
Rental Property Agreements
Standard form contracts are commonly used in rental agreements to establish the terms and conditions of the rental relationship between a landlord and tenant. A standard form rental agreement typically outlines a property description, rental terms, lease durations, security deposits, information about maintenance and repairs, and the terms and conditions for terminations.
Using a standard form contract in a rental agreement helps to ensure that the terms and conditions of the rental relationship are clearly defined and understood by both the landlord and tenant, reducing the risk of disputes and misunderstandings.
Standard form contracts are commonly used in employment agreements to establish the terms and conditions of employment between an employer and an employee. These contracts outline the duties and responsibilities of the employee, the compensation and benefits offered, and the conditions for termination of employment.
Standard form contracts in employment agreements provide a clear and standardised framework for the employment relationship, making it easier for both the employer and employee to understand their rights and obligations.
To get an overview of employment contracts in Singapore, read our quick guide here.
The terms and conditions of standard form contracts are typically standardised, meaning that they do not change significantly from one agreement to another, which makes the process of negotiating and entering into a contract much quicker and simpler.
What Makes Standard Form Contracts Different From Other Types of Contracts?
Standard form contracts are different from other types of contracts in several key ways:
- Pre-written and standardised: Standard form contracts are pre-written agreements that are used repeatedly in a variety of contexts. They are standardised, meaning that the terms and conditions do not change significantly from one agreement to another.
- Mass-produced: Standard form contracts are mass-produced, making them more cost-effective and efficient than custom-written contracts.
- Limited negotiation: The terms and conditions of standard form contracts are typically set and non-negotiable, making the process of entering into a contract quicker and simpler.
- One-size-fits-all approach: Standard form contracts are designed to be used in a wide range of situations and are not tailored to the specific needs of the parties involved.
In comparison, other types of contracts such as custom-written contracts or negotiated contracts, allow for more negotiation and customization to meet the specific needs of the parties involved. However, they can be more time-consuming, expensive, and complicated to draft and negotiate than standard form contracts.
Rights Against Standard Form Contracts
Standard form contracts can sometimes limit the rights of one party, leaving them with limited recourse in the event of a dispute or disagreement. However, it is important to understand that standard form contracts are subject to the same legal principles and protections as any other type of contract.
This means that parties have certain rights against standard form contracts, including the right to challenge provisions that are illegal, against public policy, or that have been imposed in an unfair or oppressive manner. In addition, parties have the right to seek legal remedies for breaches of contract, such as seeking damages or seeking specific performance.
It is important to carefully consider the specific circumstances and requirements of each transaction to determine whether a standard form contract is suitable or if a custom-written contract is necessary.
Here are a few examples of when Standard Form contracts should not be used:
- Complex Transactions: Standard form contracts are not suitable for complex transactions that require customization to meet the specific needs of the parties involved. For example, a merger and acquisition deal would require a custom-written contract to address the unique considerations of the transaction.
- Unique Circumstances: If the circumstances of the agreement are unique and cannot be addressed by a standard form contract, a custom-written contract may be required.
- Statutory Requirements: Some agreements may be subject to specific statutory requirements that cannot be addressed by a standard form contract. For example, a contract for the sale of real estate must comply with state and local real estate laws.
- Public Procurement: Public procurement contracts are often subject to specific legal and regulatory requirements that cannot be met by a standard form contract.
- International Transactions: Standard form contracts may not be suitable for international transactions, as they may not take into account differences in laws, customs, and practices across different countries.
Create A Standard Form Contract With Lexagle
While standard form contracts offer convenience and efficiency, there are risks to entering into an agreement where one party has a significant advantage over the other.
Before signing a standard form contract, it is important to seek the assistance of a knowledgeable professional to understand the terms and conditions of the agreement and to ensure that your rights are protected. By taking the time to carefully review the fine print and understanding your rights and obligations, you can minimise the risks and ensure a fair and mutually beneficial agreement.
Though it may seem daunting to create a standard form contract especially if you're not created one before, it doesn’t have to be difficult and complicated. You can build one using existing templates and consult with experts for perceived gaps.
Lexagle streamlines the contract lifecycle from end to end, empowering organisations to drive business growth by promoting collaboration, transparency, efficiency, and effective governance throughout the contracting process. Contact us to get a demo of our platform to see how Lexagle can best fit your organisation's unique needs today.