This page is a sample of some of the statements or questions that I often hear or encounter in commercial areas, together with my comments:
“I haven’t signed anything in writing, so don’t worry, we are not legally committed”
Contracts do not need to be signed to be legally binding – a common misapprehension by people new to commercial areas and common cause of dispute re what/whose terms actually apply (eg, battle of the forms). Performance activity or spoken word can be deemed binding. Getting correct documentary evidence of ‘offer & acceptance & consideration’ (quotations, acknowledgement of orders, etc) with correct entities, and when (if at all) formation of contract occurs with unambiguity of governing terms, is critical to your commercial routines. Make sure these are compliant and paperwork strictly observed in your business.
“We will involve contracts people when we have agreed the price”
Contracts people should be involved up-front at the start of discussions and engaged in negotiations. You should attempt to trade-off concessions in negotiations as you proceed, and converge complexity of issues towards signing. A contract should not be solely about the price, otherwise you may be in a commodity! Don’t expect contracts people to unpick racks of anomalies just before signing! Ensure your bid approval and contract review procedures give your team members adequate time and input to optimise contract outcomes.
“We put that down in our quality manual for accreditation, but that’s not how we really do it”.
There is little point in compiling a manual for cosmetic purposes, which is at odds with reality. Get your documentation right and current, your routines efficient & necessary, and ensure your team adhere to them.
“I want you to draft a contract that binds the customer, but I can get out of easily.
Some bosses seek a one-way contract that binds one party but leaves us with no liability and a clean walk away. In my experience, they seldom if ever exist. Your side needs to understand the liabilities of what they enter into, and no simple walk-aways without contingent costs. Be pragmatic about scope of what you expect your team to achieve.
“I don’t bother reading the small print of what I sign, my customer will never sue me.”
The devil is almost always in the detail! Business in complex supply chains ceased being relied on handshakes many years ago, and also being non-litigious if things go seriously wrong. Ignorance of the law, or what the contracts says is seldom (in B-2-B contracts) an excuse. Make sure you understand in detail what you are signing. Be diligent and fastidious. “Education is what you get from reading the small print; Experience is what you get if you don’t”.