subject: When in Doubt ... Document, Document, Document! [print this page] Author: Marijo McCarthy Author: Marijo McCarthy
Remember the old days, when a handshake was all it took to create a binding agreement?! Wouldn't it be nice if they were still around?! There's an adage in the real estate industry (who knows how these little sayings get started) that says the key to success for a real estate owner is location location location. If that's true, then I would call your attention to an adage in business (and I did not just make this up!) which says, when in doubt document document document. No matter what the agreement is no matter how long you have been doing business with each other no matter how "minor" it seems create a record of that oral agreement. Let me share a little story with you no names, to protect the innocent. A smart, successful client called me recently with a question about a problem she was having with a customer. Seems she and her customer entered into a solid, written contract a year ago so far, so good. However, along the way my client called that customer and asked her to make a change in the contract, a change which turned out to be rather material in the scheme of things. The customer agreed and neither party gave it another thought since the parties had done business for a number of years. In other words, the parties trusted each other and nobody bothered to read the "boilerplate" in that contract which said that modifications should be made in writing. Well, this little story has a rather sad ending. Along came a purchaser of the customer's business who bought it and, when the contract came up for renewal and my client explained the "change" that both parties had "orally" agreed to, the new owner, quite understandably, said that the change appeared nowhere in the contract, he had no knowledge of it and, furthermore, he refused to be bound by it! In the long run, this cost my client a substantial sum of money, left behind a very bad taste and, suffice it to say, they are no longer doing business together. The moral of this little story? If my client had just sent off a quick e-mail to the customer outlining the change to which they had both agreed, with a request to the customer to confirm the outcome might have been very different. So, let's recap, based upon this very real example: 1. Always, always, always get the agreement in writing the original contract, as well as any changes or renewals. 2. Stuff happens, as they say, and you definitely want to document that "stuff" as you proceed through the contract term. And, when I say "document," it can be as simple as a letter or an e-mail, as long as both parties acknowledge the change. Signatures on a formal modification are always nice, but e-mail correspondence can be very powerful evidence of mutual agreement in the event of a dispute. 3. Read, read, read and then read again. There's a reason they put the "gotchas" in small print, you know! The information you obtain here is not, nor is it intended to be, legal advice.
You should consult your own attorney for individual advice regarding your own situation. Copyright 2009 Widett and McCarthy, P.C. About the Author:
Marijo McCarthy is principal of Widett and McCarthy, P.C., a Boston area law firm that helps Massachusetts small business owners build successful companies, one contract at a time.
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