We Americans tend to love our contracts. We rely upon them. Indeed, we need to rely upon them. Contracts are the lifeblood of the deal. And, we Americans so love the deal.
But, we recognize that, for some cultures, the written contract is less important than the person with whom the deal is made. Some cultures tend to rely upon personal introductions and reputation. It may simply be a function of self-preservation, of course. In some cultures, the court system is not accessible or commercially entwined as an institution. Even historically in England and in the early days of America, we see that personal letters of introduction and letters of reference were required to initiate a relationship.
As it is now, the American commercial system is so fluid, and American judicial system so readily accessible, that Americans tend to view risk in a deal in the context of enforcement rights. This has socially evolved over the years from the, “What was the agreement?” to “What does the contract say?“; also known as, “looking for loopholes“. Some people will say that this devolution is concomitant with a loss of personal integrity and character, and some people will say this is simply a new presumptive rule-set for the deal. To each his or her own.
However, it is that recently I had the occasion to be introducing the subject of commercial contracts in my Leader as Entrepreneur class to a group of master degree students. After more the 25 years of practicing law, I started the lesson on contracts this way:
If you have the worst contract, but your deal is with good people, you tend to get through it; however, if you have the best contract, but your deal is with bad people, you will be made miserable, you will be made sore, and you will leave the deal abrased.
That is my own experience, and I’ve seen a lot deals. Moreover, I’ve seen a lot of different people doing deals.
When I was a young college student at Duquesne University, I had the occasion to study the philosophy of The Lord of the Rings. It occurred to me think about why, if all things are equal, good finally defeats evil. And, the reason is this: the integrity between or among the good is what binds the relationship. And, it is the very lack of integrity in the evil that causes evil to fall apart. Evil simply has the inherent flaw that it cannot trust anyone with which it purports to have a relationship. Good teams win because the members of the team can rely upon and trust each other.
Good sticks together. Bad lacks the adherent.
Even good people have problems, of course. And, certainly, good people still need contracts to frame the deal, and to prevent the misunderstanding that can descend into distrust. But good people are good people. What makes a person good, after all, is the integrity, self-discipline, sacrifice, empathy, loyalty and the other virtuous qualities that tend to bind one person to another in a quality relationship.
And woe to the person who has no good cause to trust, and lacks power to enforce.
Aesop has been teaching us, for more than 2,000 years, to do business with good people, or at least have the power to enforce. His timeless story of the Wolf and the Crane is presented here for your consideration and enjoyment:
13. THE WOLF AND THE CRANE
A Wolf had a bone stuck in his throat, and he was sure that the Crane, with her long neck, would easily be able to reach the bone and pull it out.
“If you pull the bone out for me, I will give you the greatest of rewards,” said the Wolf.
The Crane, so tempted by such a reward, did exactly what the Wolf asked.
After the bone had been removed, the Wolf walked away. The Crane looking on in surprise, said, “But, Mister Wolf, what of my greatest reward?”
“How ungrateful you are!” snarled the Wolf, “Your head was in my mouth, and I gave your life!”
Moral of the Story: There is no good bargain where there is neither trust in the party nor the ability to enforce the terms.
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© 2017 Gregg Zegarelli, Esq. Gregg can be contacted through LinkedIn.
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