Legally Binding Contracts? There's An App For That

The future is now, and it's filled with apps that render most learned professions obsolete. On the docket for today: an app that replaces lawyers.  Hooray?

Shake is an app for your iPhone that allows you to "[c]reate, sign, and send legally binding agreements in seconds, all from your phone." The app contains a number of stock agreements, such as non-disclosures, buy and sells, personal loans, and freelancer contracts, with more types of agreements getting added in the near future. The app is simple to use as well. You answer several questions and then the app generates your contract, which both parties can sign right on the phone. Voila! Legally binding contracts without ever wasting a sheet of paper or paying for legal services!

A friend told me he thought this was really sketchy [although the signatures are digital, they are still legally binding], and several lawyer colleagues were horrified by the app. Being a lawyer myself, I understand why. No one wants to invest time and resources to learn a trade only to have that trade rendered obsolete by technology. Even if the technology is very pretty.

I spent a few days playing with Shake to see if my friend and colleagues were right, and despite some big problems with the app (see below), I've decided that I'm okay with it. Kind of. Shake does one thing really right, and for that reason, I can't hate it: contracts are hard; they're usually long and often boring to read and write. Shake makes them easy to make, easy to read and best of all, short. By doing this, it incentivizes people to use contracts in their work, and anything  that gets artists thinking about their work from a legal perspective is a good thing.

But there are several big caveats that prevent me from recommending the app outright.

1. Stock contracts offer no flexibility in their terms and are not tailored to the specific circumstances of your transaction. While this may not be a big deal for some of you, I strongly advise caution. Your work is unique to you, and only you know the terms that will make the transaction worthwhile.  Stock contracts, by their nature, cannot give you the flexibility to ensure that your best interests are being served.
2. Contract law isn't regulated by statute at the federal level, like trademark or copyright.  Contract law varies from state to state, and what may be legally permissible in one state may not be in another.
3. When you use language you didn’t draft yourself or authorize a lawyer to draft for you, you could end up consigning yourself to something in your own contract that you don't intend. For example, in Shake's stock freelancer agreement, it states that the freelancer's work is a "work for hire."  This is wrong because in most cases, a freelancer's work is only considered a "work for hire" in a very limited number of circumstances. To confuse matters, the agreement later uses language that directly contradicts what a "work for hire" actually is.  These types of drafting issues can certainly be fixed by a software update, but right now, the contract is  ambiguous and confusing at best, and unenforceable at worst.

If the choice is between using Shake or nothing, I'd tell you to use Shake every day of the week and twice on Sundays. But if you want a contract done right and in a way that serves your legal interest, draft it yourself or, even better, hire a lawyer.