Professional Obligations
A set of model rules and obligations would go a long way and prevent the lawyer from making his/her client committing fraud. In that context, first, an attorney should refrain from making false representations and warranties on behalf of his client. A representation is a statement that the client asserts as true and valid on finalizing the contract on which the other party places reliance. On the other hand, a warranty is an assurance by a party to the other party that the other party would be repaid in case of any wrongful representation made by the party. Second, typographical mistakes that benefit the attorney-client while drafting an agreement should be reported to the other party’s counsel. The attorney should not take undue advantage of such situations to benefit one’s client. When some clauses of contracts require certain specifications, the client’s attorney should dutifully include them in the contract without any omission or vagueness. Further, a lawyer should avoid drafting invalid and unenforceable provisions which he knows are void in the eyes of the law and yet incorporates such clauses in the agreement. Example: Person A appointed person B as an attorney to draft a sale agreement regarding the sale of his/her estate for $ 55,250. Person B specified a slab of payments and the period during which the other party must make such payments. However, while making such a slab of payments, he/she overwrote the payments to be made by the other party to his/her client. The agreement came to be executed as person B failed to inform person A of the same and thus indulged in fraud and made his/her client commit fraud unknowingly.
Non-party Duties
An attorney owes certain duties to a non-party in a contract. However, an attorney is liable to non-party for drafting of a contract. However, this in no way indicates that the attorney is not liable to be sued by third-party beneficiaries of a contract. The attorney is held liable when he/she has committed fraud or unscrupulous intentions for causing damage or harm. That such liability is seen mostly in cases of negligent drafting by an attorney. Example: Person A was appointed as an attorney by person B, a financial institution, to draft an agreement for the loan for person C. The agreement came to be finalized and executed. However, person C failed to pay the installments as stipulated in the loan agreement. As a result, person B filed a suit against person C for recovery of the loan installments. However, person C defended the suit because the bank guarantee agreement was never approved by XYZ company, and thus, person C is not liable for any such payment. Person M, an MNC who purchased an interest in the loan in good faith, sued person A. Person M, a third-party beneficiary of such loan agreement. His/her right to sue person A for negligent drafting, which caused major financial losses to them, is held valid and correct in the eyes of the law.
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