The Art of Drafting Agreements

Joseph D. Joiner Comments
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I must confess, the contracts course was not my strongest effort in law school. I approached it as something to get behind me so I could go to court and do what I really wanted, which was trial work. It took a number of years (never mind how many) of doing that fun stuff for it to dawn on me: Contracts are fascinating.

I recall mentioning to a friend in this business, a Southern California operator, that I was thinking of taking up golf. This guy was a well-known golfer, having previously won the California amateur title. He looked at me closely and said, “Well, before you try to play a round on the course, I think you ought to take a few lessons—spend a lot of time on the practice tee.”

“Sure,” I said, “how much time?”

“Until you begin to get an idea what you’re trying to accomplish out there.”

Bingo—that’s also how you should read or draft any sort of agreement, including your self-storage contract. What was the person who wrote it trying to accomplish? Did some provisions wind up in the contract because the business lost an argument with someone, then went back to its lawyer and said something like, “Look, put something in here so we don’t lose that one again”? That’s often exactly what happens, which is good thinking. On the other hand, are some provisions there because they were copied, with little or no thought, from another agreement? This might be inappropriate or downright erroneous.

Over the years, I’ve seen a lot of self-storage contract provisions that could only be called “goofy”—especially if read with this question in mind: What was the operator trying to accomplish there? Following are a few of my favorite goofy contract stipulations.

Tenant hereby releases all claims for loss or damage against Owner, except for loss or damage caused by the negligence of Owner, or Owner’s employees or agents.

Huh? What other sorts of claims are likely to be raised? Hardly any—that’s what sort. Nearly all claims against an operator are going to be based on negligence of some kind. This operator might as well have added my favorite e-mail notation, “lol” (laugh out loud), at the end of that section. There is a caveat, though. In some states, a release for negligence is unenforceable in certain circumstances. In states where it is enforceable, it is incredibly funny—to read, that is.

Tenant hereby grants Owner an automobile storage and repairman’s lien for all unpaid rent or other charges incurred at Tenant’s request.

Whoa—a what? This one popped up in California a number of years ago. Upon inquiry, the operator explained he had adapted that section from his auto-repair contract. Well, yes... and is this an auto repair business or a self-storage business? The operator responded, “What’s the difference?” Well, how much time do you have?

In the event of any lawsuit arising out of this agreement, the prevailing party shall recover its costs, including attorneys’ fees, from the losing party.

Wait a minute—who’s better able to pay an attorney—you or your average customer? This is a more subtle but frequent goof. Some states (California being one) have a statutory provision that provides that any attorneys’-fee clause will be interpreted to award fees to the winner.

In such states, you should not have any attorneys’- fee clause in your agreement. In other states, a “one way” attorneys’-fee clause is enforceable—that is, you can provide that you recover your fees regardless if you win. In either case, the above clause is a mistake. After all, generosity has its limits, eh?

In the event of any breach of this agreement by Tenant, Owner may declare this agreement null and void, and proceed to file an action in court to recover any and all sums due Owner under this agreement.

This is a really thoughtless goof. The tenant’s response will most likely be, “Does ‘null and void’ mean we never had a deal? Does that mean no release of liability, no lien rights, no late fees and no rent? File an action in court? Oh, please.”

Tenant agrees that the value of all property stored shall not be deemed to exceed the value of $1,000

(followed a little later by) Tenant will store the following property:

_____________________________________.

Value:__________________.”

This is a real one-two laugher. Does the term “blank check” have any meaning for this operator?

Conclusion

The tendency to let your eyes glaze over when reading a standard form contract, especially your own, is strong. However, you can resist that tendency by reading with a couple of critical questions in mind: What am I trying to accomplish with this item? Does the provision potentially hurt me more than it helps?

Learning to analytically read a standard form contract has another benefit: It can offer endless entertainment in the form of goofy provisions! The next time you’re stuck for reading material, give it a try.

Joseph D. Joiner has been giving self-storage operators legal advice for more than 25 years. A real estate and business lawyer doing litigation and transactional work, he practices in California and New Mexico. He and D. Carlos Kaslow are co-authors of the Rental Agreement Handbook, sold through the Self Storage Association (SSA). He is also is a partner with Kaslow and Scott Zucker in the Self Storage Legal Network, a subscription consulting service for members of the SSA. For more information, visit www.selfstorage.org.

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