Stories
Here are some stories of how important contract review, revision, and negotiation is.
A Landlord
The Empty Box
A landlord came into my office with her first lease agreement for her first tenant for her first-ever property she owned. She was able to purchase the property relying on the rental income to cover the mortgage payments. One missed rent payment would be fine, but two could risk placing the mortgage into default and causing foreclosure of the property she worked so hard to be able to purchase.
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The landlord made a good choice to partner with a realtor to hand-select a tenant for the property. The realtor found a tenant with a great credit score showing trustworthiness in payments. The realtor even had access to California Realtor's Association forms (CAR forms) to put together a standard lease agreement for the new tenant. The realtor and the landlord filled it out. She thought it was good to go, relying on her own experiences in signing the same form for years prior to that day; "the realtor does this for a living".
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California law protects tenants with excruciating protections that can hand-cuff landlords from exercising normal rights and rules with regard to the property. The realtor knew most of them, but didn't know when they would apply or when they could be exempt.
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Thankfully, the landlord had OLC review the standard form contract. OLC was able to find a box that wasn't checked, but should have been checked. It wasn't too late. The landlord checked the box, then had the tenant sign.
3 years later, the landlord wanted her daughter who just started college to move into the property. But her tenant was still in there. Thankfully, the landlord was able to provide notice to the tenant to terminate the lease and have the tenant move out (with sufficient time not to be homeless) for her daughter to be able to move in.
The only way this was able to happen was because of the tiny box that was checked after OLC reviewed the lease. If the landlord hadn't had OLC review the contract, if the landlord had not checked the box, the tenant protections would have prevented landlord from terminating the lease for her daughter to move in.
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The landlord (or her daughter) would have had to pay $2,500 / month for someone else's property and someone else's mortgage.
The landlord paid $600 for OLC to review and revise the 30 page standard agreement.
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Was the $600 worth it?
The Influencer
From Deal to Steal
A local influencer was solicited with a deal from a popular brand. All they had to do was make short form videos displaying a phone case of a company that would be sold for $10 to other consumers.
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In return for making the videos, the influencer was promised an up-front flat fee and a percentage of sales.
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The brand presented him with a social media agreement / influencer contract. He read it, thought that it contained everything and that, in any event, it wouldn't really matter if something went wrong because they had to pay up-front anyway.
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He signed without the help of OLC.
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Months later, it turns out that the company had stolen the design of the phone case from another manufacturer. The other manufacturer sued the company, AND the influencer, claiming that the influencer should not be allowed to keep the revenue made from displaying a product that the company did not have a right to sell.
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The influencer ended up being able to keep the revenue he made from the videos BUT had to shell out thousands of dollars in court fees and attorney's fees to defend the lawsuit.
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Had he came to OLC before he signed the contract, OLC would have placed the appropriate protections in place in the contract to prevent this exact circumstance from taking place.
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The contract was two pages. It would have cost $100 to have the contract reviewed and revised by OLC. Instead, it ended up costing more than he had made on the deal, even though he got to keep it.
The Mechanic
Tighten it Just Enough
When I younger, my dad taught me to tighten screws as tight as possible, but then to loosen one or two rotations to make sure there's enough play. If it's too tight, the thread will be damaged and you won't get a secure fit.
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A mechanic got a huge deal with a car dealership in his county. Wisely, the mechanic sought the help and experience from OLC to review, revise and negotiate the contract.
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The mechanic had already negotiated the business deal (how much the services will cost, when he will be required to have his staff on-site, etc.) but the legal terms hadn't been negotiated. The mechanic believed "everything was there" that they had talked about. And it was ... but not in the way that would protect his business.
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The payment terms were drawn up in such a way that the dealership could wait nearly 5 months before having to pay the mechanic for any services performed. Imagine performing thousands of dollars worth of services and having to wait 5 months for payment, without even knowing that you would have had to wait 5 months for payment!
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The car dealership had lawyers draft the contract and those lawyers did their job well (protect the company!). However, the mechanic leveled the playing field by engaging the Oozoonian Law Corporation.
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Among other terms, we were able to negotiate the legal terms of the contract to require payment much sooner. Although the terms had to be negotiated, both parties (both the dealer and the mechanic) had to give in one place in order to take in another leading to a happy compromise.
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Had the mechanic just reviewed it himself, he would have signed and lost. Thankfully, he came to OLC.
The Photographer
The Picture Might Exist ...
A photographer was requested to come to an event of a Company and take pictures of the event. They were presented with a contract that promised payment up-front, before the photographer arrived at the location for shooting.
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The company even mailed the check with the contract.
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The photographer thought there was no risk to the contract; all she had to do was take pictures, the money was already being paid, and they were even covering expenses like transportation and costs of SD cards for the camera.
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Thankfully, the photographer came to OLC anyway.
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OLC reviewed the contract and performed a light investigation into the company that sent the check and the contract.
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It turns out that the Company didn't exist at all. The company could not be verified to exist and when OLC asked the photographer to ask the company for corporate papers, the company stopped responding.
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Instead, the company kept asking why the check hadn't been deposited yet.
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OLC immediately advised its new client that she was 90% the next victim of a scam and not to deposit the check. To date, we still don't know what would have happened if the check had been deposited; but we're both thankful that a quick search revealed a huge red flag.
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The photographer was able to book an alternative shooting that day and still made money, instead of showing up to an empty space, for a non-existent company.
