Never Do a Contract When a Letter Will Do

I admit I probably shouldn’t be posting this because I’m not an attorney, so I don’t give legal advice. This is just anecdotal, based on what I’ve seen in my business experience. Consult your attorney. I worked for years with a smart, honest business lawyer who — well, let me get to that later in this post. 

First, however, here’s what I’ve seen in several decades of running a business.

1. Your should always get the specifics of a deal down in writing. They should be discussed, negotiated, agreed, and and signed. But that doesn’t often mean “a contract” negotiated with and by lawyers. A simple letter, and in many cases an email, is sufficient.
2. The real purpose is getting an agreement defined well. Contracts are for special cases. In my opinion.
3. I’ve never seen a contract end up with some judge or legal authority reading its details and deciding what gets done.
4. I’ve spent excruciating hours, several times, working through the details in a contract full of formulas and hypothetical situations, none of which made any difference when the business relationships fell apart.
5. In every one of those cases, we ended up in mediation. It all came down to negotiation at the end. The detailed contracts were just framing.
6. I’ve several times failed to get a contract enforced when a big company was on the other side. “We don’t agree with your interpretation,” I was told in once instance. The unspoken challenge was “so sue us.”
7. The real value of the vast majority of contracts is only the same as in a simple non-legalese written agreement in email or as a letter. It gets both sides clear on what they’ve agreed, and serves as a reminder later. And for that, you can get as much utility in a well-written non-legalese short letter as you do in an excruciatingly detailed contract. Do get it in writing. Do agree and sign. But call that a letter, not a contract.
8. I’m not knocking contracts where they’re needed: employee-employer relationships, confidentiality, non-disclosure, consultant, programmer, author and publisher … these are usually boilerplate. They aren’t worked to death for each case.

This is just my opinion, and I’m a business owner, not a lawyer. Regarding the smart business lawyer I mentioned, he warned me more than once that spreadsheet and-of-contract formulas would be hard to enforce and would probably be moot anyhow, since disputes would most likely end up in mediation.

(Image: Mircea RUBA/Shutterstock)