Had an interesting conversation with my husband last night. A man who owned his own business called him for advise regarding a year-old outstanding bill owed him by a customer who also happens to be a friend. It was not a small amount either and totalled in the thousands. He will have a difficult time collecting, if ever, on this debt...and bridges may have to be burned. The overlying reason is most frustrating -- the terms of agreement are VERBAL. Nothing is written. The whole transaction was sealed with a mere handshake.
Now, in a perfect world, a handshake or simply one's word, should be a bond worthy of complete trust. But even when there is that, no two visions are alike. A contract is a tool that can aid in articulating the desired results and also provides the needed parameters to conduct business in a professional and judicious manner. It is not a question of honesty or integrity. There is no morality involved here. The objective is CLARITY for both parties. Where at least two people are involved, an agreement sealed only verbally is a broken bond waiting to happen, at the very least, and a misfortune about to combust, at the very worst. Either way, it will just be a matter of time before this method of doing business will bite where it hurts.
I don't know if it's culture or simply naivete but many people do business this way especially in small communities. People like this person are seen as "good men" who do business the "good way". But morality or goodness is not an issue here. Savvy and intelligence are obviously the items lacking in this picture. I am especially perturbed by the warped sense of "what is good" seen through the eyes of this poor man. Let me elucidate.
First of all, he states that he has never had a problem before doing business without a written contract. Well, he does now. Like I said, it was just waiting to happen. This is how everyone else perished during the flood but not Noah and his family. I am sure a lot of "it never flooded before" poured out of many mouths both during Noah's time and even in New Orleans before the dikes and levees broke. A bad business practice is simply that---bad.
Secondly, he is adverse to issuing written contracts not just because he never needed to in the past but also because he sees written contracts as a sign of distrust. He just wants to be a "good guy". What he is is a foolish businessman and this warped sense of "good" precludes that issuing written contracts is "bad" which is totally untrue. A written contract assures that BOTH parties are protected. It stipulates exactly what job needs to be done, the cost, the time of completion and whatever expectations that can be anticipated. Just because one's word is his bond doesn't mean that their expectations are exactly on the same plane...or that the other party will always be honest. In fact, honesty can be such a gray area in business transactions because each party can have their own interpretation of what was agreed upon. A written contract is legal and binding and all parties need to adhere to the terms of the contract. Even entering a Mormon temple requires a written recommend and you can't enter with just your 'word of honor'. A recommend is indeed a 'contract' that one is worthy to enter the temple and is well aware of the repercussions of their disobedience. But no one is going to question that once you have your recommend. But without it, your word is not good unless you can find the appropriate leaders to vouch for you.
Third, doing business in this reckless manner renders one vulnerable to broken friendships, loss of business, dishonest clients and associates and yes, even family feuds. This is why having a trust and a will is just utterly important and anyone who thinks that they don't need a will because they don't have any 'money' indeed either has tunnel vision or simply don't know enough to appreciate its importance. Ignorance does not excuse one from the "floods" and unforeseen catastrophes that life simply has in abundance. Let me just say that a written contract between good friends you love and especially family members you adore is even more crucial when doing business with them. It is just plain insane not to have one. Many relationships have combusted simply because there were no clear and written parameters for all parties concerned. A written contract saves relationships. I cannot even emphasize this enough.
Finally, it is irresponsible to conduct business recklessly when you have a fiduciary duty to provide for your family. This privilege should not be taken lightly and must be fulfilled wisely. My husband has a family picture prominently displayed in his office to remind him where his duty lies. It reminds him to conduct his business wisely, with integrity and with the appropriate zeal to achieve success---to stretch himself, continue improving and hopefully garner more wisdom from his experiences. It also provides him the needed push when he feels frustrated or at times, daunted by the many risks that he may need to take to grow---and the faith in a God who is always willing to help. The distortion between what is "good" and what is "wise" in this case is blaring. Good and sound principles are necessary for success in life. We must know what these good principles are and then govern our lives accordingly.
Now, in a perfect world, a handshake or simply one's word, should be a bond worthy of complete trust. But even when there is that, no two visions are alike. A contract is a tool that can aid in articulating the desired results and also provides the needed parameters to conduct business in a professional and judicious manner. It is not a question of honesty or integrity. There is no morality involved here. The objective is CLARITY for both parties. Where at least two people are involved, an agreement sealed only verbally is a broken bond waiting to happen, at the very least, and a misfortune about to combust, at the very worst. Either way, it will just be a matter of time before this method of doing business will bite where it hurts.
I don't know if it's culture or simply naivete but many people do business this way especially in small communities. People like this person are seen as "good men" who do business the "good way". But morality or goodness is not an issue here. Savvy and intelligence are obviously the items lacking in this picture. I am especially perturbed by the warped sense of "what is good" seen through the eyes of this poor man. Let me elucidate.
First of all, he states that he has never had a problem before doing business without a written contract. Well, he does now. Like I said, it was just waiting to happen. This is how everyone else perished during the flood but not Noah and his family. I am sure a lot of "it never flooded before" poured out of many mouths both during Noah's time and even in New Orleans before the dikes and levees broke. A bad business practice is simply that---bad.
Secondly, he is adverse to issuing written contracts not just because he never needed to in the past but also because he sees written contracts as a sign of distrust. He just wants to be a "good guy". What he is is a foolish businessman and this warped sense of "good" precludes that issuing written contracts is "bad" which is totally untrue. A written contract assures that BOTH parties are protected. It stipulates exactly what job needs to be done, the cost, the time of completion and whatever expectations that can be anticipated. Just because one's word is his bond doesn't mean that their expectations are exactly on the same plane...or that the other party will always be honest. In fact, honesty can be such a gray area in business transactions because each party can have their own interpretation of what was agreed upon. A written contract is legal and binding and all parties need to adhere to the terms of the contract. Even entering a Mormon temple requires a written recommend and you can't enter with just your 'word of honor'. A recommend is indeed a 'contract' that one is worthy to enter the temple and is well aware of the repercussions of their disobedience. But no one is going to question that once you have your recommend. But without it, your word is not good unless you can find the appropriate leaders to vouch for you.
Third, doing business in this reckless manner renders one vulnerable to broken friendships, loss of business, dishonest clients and associates and yes, even family feuds. This is why having a trust and a will is just utterly important and anyone who thinks that they don't need a will because they don't have any 'money' indeed either has tunnel vision or simply don't know enough to appreciate its importance. Ignorance does not excuse one from the "floods" and unforeseen catastrophes that life simply has in abundance. Let me just say that a written contract between good friends you love and especially family members you adore is even more crucial when doing business with them. It is just plain insane not to have one. Many relationships have combusted simply because there were no clear and written parameters for all parties concerned. A written contract saves relationships. I cannot even emphasize this enough.
Finally, it is irresponsible to conduct business recklessly when you have a fiduciary duty to provide for your family. This privilege should not be taken lightly and must be fulfilled wisely. My husband has a family picture prominently displayed in his office to remind him where his duty lies. It reminds him to conduct his business wisely, with integrity and with the appropriate zeal to achieve success---to stretch himself, continue improving and hopefully garner more wisdom from his experiences. It also provides him the needed push when he feels frustrated or at times, daunted by the many risks that he may need to take to grow---and the faith in a God who is always willing to help. The distortion between what is "good" and what is "wise" in this case is blaring. Good and sound principles are necessary for success in life. We must know what these good principles are and then govern our lives accordingly.
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