Five Resolutions to Avoid a Contract Lawsuit in the New Year
New Year’s Resolutions! We all make them, we all drift away from them. Is there really a point to it? If we get a little careless, what’s the worst that could happen?
Hint: look at the title of this post.
Let me share a few habits that many business owners wish they had developed before they ended up in court.
#1 “If you don’t write it down, it never happened.” Get your contracts in writing. Handshake deals work—except when they don’t. When your contractor, investor, or partner remembers the deal differently than you do, you can end up with a completely unnecessary fight on your hands. You won’t need a hundred pages of fine print. Maybe a one-paragraph purchase order form will do the job. But put at least the basics down on paper and save both parties a lot of grief down the road.
#2: “Don’t be ‘that guy.’” Be flexible. When you can, go the extra mile. In my experience, many if not most lawsuits start because both sides see the other as unreasonable. Not to say you should let people walk all over you, but when someone comes in with a complaint or a problem about your deal, listen.
#3: “I cannot tell a lie.” Be honest. Little white lies in social settings are one thing. But in business, one little fudge turns into another, and another... If there’s a problem, ‘fess up and work it out, don’t hide it or blame. Not only will this tend to stave off lawsuits, it will make it much easier to win if you have one anyway.
#4: “Neither a borrower nor a lender be.” Sometimes you have to. But minimize it. And above all, don’t advance more credit to someone who hasn’t settled his account. When the stakes get high, some debtors will turn on you. As Shakespeare put it, “loan oft loses both itself and friend.”
#5: “Don’t be a stranger! You don’t call, you never write...” Stay in touch. It’s psychologically easier to sue a business, than ‘that nice lady at the restaurant/hair salon/repair shop.’ Something as small as a holiday card can make it a human relationship, so problems are worked out in person, not in court.