Since we live in a capitalist society, we exchange money for goods and services everyday. Last week I leased a new car and and I was required to sign on the dotted line. When we go to the store to purchase a package of gum with cash, that type of activity clearly does not require a contract. However, if you are running a business, clearly you need to be aware of contracts. The big questions is whether you need a contract for every business relationship. The answer is ABSOLUTELY!
The biggest issue is dealing with unwanted and risky litigation. I’m about to go to trial a case in New York Supreme Court where there was no written contact and a certain of amount of money that was loaned was not returned. Since there are issues of fact, the judge will decide the nature of the agreement by ascertaining their subjective course of conduct. Two days of trial, plus trial preparation is an expense that only your lawyer can love.
Some business relationships have no written agreement and work fine. Fred Wilpon and Saul Katz co-owners of that hapless team the New York Mets, do not have a partnership agreement between them. But I would not recommend that you follow in their footsteps.Mets Logo (Photo credit: Wikipedia)
California attorney Elizabeth Potts Weinstein notes that the contract defines the relationship.
Everyone knows what is expected throughout this relationship, so it is less likely there will be difficulties or misunderstandings.
This is huge.
People think that contracts are just there to make the lawyer happy – but this contract is primarily to make the relationship go smoothly! If everyone knows what they are supposed to do (and what happens if they don’t do it) – then you guys will be able to do business together that much longer, and that much more profitably.
So be smart and have all of your business relationships reduced to writing.
The Law Office of Frederic R. Abramson represents businesses and individuals in New York. If you have a legal issue, feel free to call me at 212-233-0666. I would love to hear from you.