The Finance Brokers Association of Australia (FBAA) has warned brokers to be careful before using templates for contracts and other legal documents.
The warning comes following advice from a leading lawyer that explained the risks with template documents.
Senior Associate of Rodgers Barnes & Green Lawyers, Alexandra McVay said while all businesses involve risk, brokers need to be informed and decide whether or not the risk is acceptable.
“Templates are only tools. They act as a guide and often provide a structure for what might be appropriate in some transactions but often do not deal with all the things that may be needed in that transaction,” she explained.
“A template contract may have all the headings and structure that your business contract requires but your contract may need provisions for warranties, indemnities and guarantees drafted that the template contract doesn’t contain.”
FBAA chief executive officer Peter White said this was “good advice that should be adhered to by the industry”.
“I know that many brokers use general templates, but there are several contracts – including privacy act documents – that should be specifically tailored to one’s own business,” he said.
Ms McVay said that if a contract or document does not contain provisions that will protect the brokerage business and interests, brokers may end up assuming legal risks for which they are not prepared.
“The legal document may be unenforceable, you may lose your rights, you may not have complied with your legal obligations and ultimately this may lead to litigation.
“You need to balance the saving in costs against the possible expense that may arise if legal risks are not adequately covered off.”
Mr White said that brokers should make sure they are aware of the ramifications and risks of using a template and then decide whether the risk is worth it.