We discussed the dos and don’ts of contracting by way of a case study, which was based on an actual dispute one of our clients had faced. The key takeaways from October’s Business Breakfast Club were:
- When making an agreement with another party, you should consider questions like what could go wrong, how you can stop it from going wrong, and if an outsider had to look at this agreement (i.e. a judge who may have the final say on matters in the event of a dispute), what will they make of the agreement?
- We cannot say that you didn’t get what you bargained for if we do not understand the bargain itself or how it came about.
- Put your agreement in writing. Even if you don’t formally document the specific terms of the agreement, at least document your understanding of the agreement by way of email (or even a text message). This serves a dual purpose – you’ve written down what you think the agreement is and it also gives the other party the opportunity to either agree or refute the terms and offer their understanding of the agreement. But of course, we will always recommend that you save yourself some trouble later down the track and put your agreement down in a formal document.
- Don’t start actioning your part of the agreement until you and the contracting party have agreed to what it is exactly that you are to do. This for a number of reasons, but primarily because:
- a counter-offer is not acceptance;
- past consideration is not good consideration for future representations (i.e. I buy a horse from you and after the transaction is finished you tell me the horse is good-natured, but later I find out the horse is quite vicious, the money that I paid when purchasing the horse could not support consideration for the subsequent promise);
- while silence does not equal acquiescence, conduct might; and
- what is central to traditional contract principles is the notion of consensus ad idem (or ”meeting of the minds” for those who aren’t familiar with Latin), which basically means that both parties must be aware of the terms of the offer and agree to them.
While we are running a series on contracts, each Business Breakfast Club will be a self-contained talk on a different element within the subject of contracts – we encourage you to attend all the sessions, but you are more than welcome to come to just the particular ones you are interested in.