The Most Important Legal Axiom in the Business World
My kids love to play two-square. But every time we play, the rules of the game change. Our games may have spinnies, hardies, bus stops, back stops, or maybe rainbows. In our last outing we were even stuck-in-the-mud, throwing a whole new wrinkle into the game. The bottom line is that I never know the rules of the game until AFTER we begin playing. Often I am forced to rely on a "caller" to enforce the rules of the game.
But in business we are not too far removed from our playground games. It is always better to know the rules of the game before we enter into business relationships. Consequently, we better remember the most important legal axiom in the business world:
IF YOU HAVE AN AGREEMENT, GET IT IN WRITING
You are probably thinking, "Duh!" Tell me something I don't know. But why then do so many people forget this simple principle so often?
Except for certain situations a valid contract may be either written or oral. That's not the issue. The problem is that ordinarily no one remembers an oral contract quite the same way. Memories fade and sometimes people actually have been known to lie.
- Buy-outs that were to happen after three years don't occur;
- Subcontractors don't receive payments as promised;
- A franchisee doesn't receive a protected territory as indicated on discovery day;
- An employee is told a non-compete won't be enforced.
The examples could go on and on. It doesn't matter how well you know business associates or how much you trust someone, you should always get it in writing. Doing so is just smart business and no one involved should be offended. In reality both parties are protected with written contracts. And you want to make it easy as possible for the "caller" if the case goes to court.
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