Monday, September 3, 2007

Get It In Writing

When you are in business, you may often find yourself entering into agreements with other business people - perhaps suppliers or customers. Some people are proud that they can do business on a handshake, but I personally feel that, if there is any degree of sophistication to a deal, it should be in writing.

Writing it down makes sure everyone is on the same page. Did you ever play that game as a kid, where you start off whispering something to someone in a circle and, by the time it gets to the end of the circle, the original message has turned into something completely different? The same thing can happen when you have a conversation with someone about a business deal. It just seems that, quite frequently, two people can come away from a conversation having very different recollections of what transpired and very different expectations about what is to be done.

This difference of opinion is often at the root of law suits. When people's expectations are not met, they tend to sue. If you can get something down in writing and hash out the details ahead of time, it can significantly cut down on confusion around who is doing what, by when and for how much. By going through the exrecise of writing it down, people usually discover that there are more details to be dealt with than they may have anticipated. Discussing the details ahead of time helps the parties to clarify all of the terms of the deal. Even if you do this without a lawyer, it can at least help to avert confusion around the basics of the transaction, and this is important.

If you want to go a step further, you get a lawyer to draft the agreement, and that way you should be able to depend upon that agreement being legally enforceable. There are aspects of contract law that we lawyers study that assist us in ensuring that the basic components of a contract are in place, so that, if necessary, the contract can be used as the basis upon which one party can pursue another party on default. Also, the process of working with a lawyer to draft the agreement can assist the parties in considering all of the angles and discussing, ahead of time, the "what ifs". The parties can actually decide, in the contract, what the consequences of default will be. This provides some stability and fairness to the enforcement process.

It may be useful, in your business, to have a standard form contract, that can be modified to incorporate the specifics of each transaction. This could be drafted by a lawyer, without having to pay a lawyer everytime you enter into a new contract.

Whether you involve your lawyer or not, getting it down in writing will go a long way to making your business run more smoothly and, you will likely end up with happier customers, whose expectations are being met at an agreed-upon rate by an agreed-upon time. And this just makes good business sense.

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