How A $12 Contract Can Cost You $80,000 Or More, Part 4

LegalZoom Cannot Get Its Own Contract Right With Its Customers

When you purchase a document from LegalZoom, you automatically execute a binding, legal contract with it, entitled “Legal Document Assistant Contract for Self-Help Services” (we’ll call it “Your LegalZoom Contract”). 

After receiving such a contract when I bought LegalZoom’s General Agreement, I, of course, read through it and discovered it was unclear what certain provisions actually mean.  Uh oh.  The ambiguity problem has reared its ugly head again![1]

Let’s break this problem down.  One.  Your LegalZoom Contract lacks an “Entire Agreement” provision, which, oddly, appears in LegalZoom’s General Agreement (a very good thing for you).  Why do you care?  Well, an Entire Agreement clause prevents either party from incorporating other documents like emails and notes, or conversations into the contract to make it whole.  After all, you do not want to be in a position where you have to stitch together various papers to create what you think is a whole agreement because the other side can do exactly the same thing!  It’s time consuming and potentially very contentious. 

By failing to have the Entire Agreement provision in Your LegalZoom Contract, LegalZoom has opened a slew of possibilities regarding what makes its contract whole, including anything else it says on its website, which leads us to the second part of the problem.

Two.  On the LegalZoom website, it has “LegalZoom Terms of Service” (we’ll call it “TofS”), which is also a contract.  So, if you wanted to challenge the interpretation of Your LegalZoom Contract, you can argue that the TofS is part of it.  Then, chaos would ensue.

By way of example, Your LegalZoom Contract lacks an arbitration provision but provides for the recovery of attorneys’ fees by the winner of any lawsuit in court.[2]  Typically, you have to insert an arbitral clause into your agreement if you want to arbitrate any future disputes based on it.  Because Your LegalZoom Contract fails to incorporate one, you must sue LegalZoom in court—small claims or courts of limited or unlimited jurisdiction.  Fine. 

But wait.  You can’t forget about the TofS.  Well, the TofS also tells you where you can sue LegalZoom.  It states: “Disputes shall be resolved through binding arbitration or small claims court ….”[3] 

Okkkaaayyy.  So, arbitration isn’t an option because Your LegalZoom Contract doesn’t provide for it.  And you can’t bring an action in courts of unlimited or limited jurisdiction because the TofS restricts you to small claims.[4]  You must sue in small claims court.  But, then, what did LegalZoom mean by—the winner recovers attorneys’ fees if they succeed in a lawsuit in court?  If you have to bring a lawsuit in small claims, then you are not allowed an attorney to represent you! [5]  If you aren’t allowed an attorney, you cannot recover attorneys’ fees!!!  You do not have any!  What the hell?!?  Whatever LegalZoom meant here, your guess is as good as mine.

As you can see, LegalZoom creates a genuine conflict between its agreement with you and its TofS, making its contracts ambiguous!  Given LegalZoom’s questionable ability to draft its own agreements, should you really rely on its products?

 ~ To Be Continued in How A $12 Contract Can Cost You $80,000 Or More, Part 5 ~

Disclaimer: The information contained in this article is intended to provide general information and does not constitute and is not intended to constitute legal advice.  Further, any analyses of facts contained herein are the mere opinions and interpretations of Erica based upon her viewpoint.  This article is designed to help readers be aware of the dangers of using legal document self-help entities based on the information she obtained from LegalZoom on May 10, 2012; thus, the information and materials contained in this article may be invalid or outdated. The content provided is not warranted or checked to ensure that the content contained herein is up-to-date.


[1] See How A $12 Contract Can Cost You $80,000 Or More, Part 2.

[2] Your LegalZoom Contract, p. 3.

[3] TofS, ¶ 3 (emphasis added). 

[4] I’ll admit that this limitation would be hard to enforce directly.  Most likely, if you brought a suit in a court of limited or unlimited jurisdiction, the judge would bump you to binding arbitration.

[5] See How A $12 Contract Can Cost You $80,000 Or More, Part 4.

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