Dec 6, 2017

Getting the Facts on Unenforced Terms

Most of us have signed stuff that included terms one side didn’t stick to, and which the other side knew it wasn’t sticking to, and no one ended up in court. Agreements may be legally binding, but in practice lots of contractual terms are not enforced. That might not sound so bad, but there are some pitfalls to watch out for. This post covers how to avoid getting blind-sided by unenforced terms in your agreements.

The Right to Enforce–Or Not

If you sign a contract you have the right enforce it–meaning to insist that the other party follows what the contract says, and to get the courts involved if needed. But in practice there are lots of reasons terms go unenforced: maybe the arrangement is working out just fine, so no one really cares what the contract says; or maybe one side cares a little bit about small violations, but not enough to devote time and money to taking the other party to court over it.

Pitfalls of Unenforced Terms

So what’s wrong with parties offering each other a little flexibility? 
The major problem is that this flexibility can dry up in an instant. Most contracts include a waiver clause, which says that parties can enforce terms at any time, even if they never have before.  It also says that just because certain terms aren’t enforced doesn’t mean other terms can’t be.  So just because one party didn’t care yesterday about late payments doesn’t mean it can’t start caring tomorrow; and just because it looks the other way on some disclosure stuff doesn’t mean it will allow you to play fast and loose with non-compete clauses.

This can be confusing, because it’s human nature to expect consistency.  The more time that goes by without enforcement of terms, the more caught unawares you will probably be when someone suddenly kicks up a fuss.

Best Protection: Know Your Deal!

This is doubly true if you didn’t know you were violating the agreement in the first place. Unfortunately it’s common for people—especially freelancers—not to fully understand what’s in their contracts, leaving them even more vulnerable to the effect of unenforced terms. It could be weeks or even months into a contract before clients start enforcing terms that a freelancer has been violating all along without even knowing it. When the hammer finally drops it can seem unfair; but as far as the law is concerned, “You never cared before!” isn’t a legitimate argument.

For this reason, one of the best ways for people doing creative work to protect themselves is to really understand what they are signing in the first place. The fewer surprises down the line, the better.

Written by Dan Dalzotto

Co-Founder & Chief Product Officer

More about Outlaw

Outlaw is an end-to-end contract platform that eliminates contract chaos to help organizations reach agreement faster. From dynamic template-based generation through cloud-based negotiation, lifecycle management and reporting, Outlaw automates and streamlines contract workflows in the most seamless, productive environment you’ve ever seen.

Outlaw has been recognized as a legal technology leader in 2020 by the National Law Journal and is venture-backed by Bowery Capital. A customer-first CLM partner, Outlaw powers digital contracting for the world’s most innovative companies including Intrado, EVgo and Beyond Pricing. Visit our homepage to learn more.

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