Jim Thompson

Email Jim at jim.thompson@ipulpmedia.com

If you have bought anything larger than a lock washer, you've seen the documents. In paper form, reams and reams of paper describing every last thing possible in a purchase contract. In my fifty-five years in industry, I can't think of anything that has grown faster than the purchase "agreement." Yet, today, a significant portion of my income is from efforts as an "expert witness" in contract arguments. Something is amiss here.

How did this happen? Perhaps I am biting the hand that feeds me, but I'll suggest paying lawyers by the hour has had a significant input into the growth of these documents. And not just the lawyers you hire to help you write them, but the lawyers your opponents hire to destroy them, too.

Such documents add significant costs to the costs of doing business.

Even on the routine purchases, you send along a page or two of "fine print" covering a myriad of things, real or imagined. And, of course, the seller has to have their lawyers go through these points, a cost which is eventually added into the purchase price of any goods or services. You think they throw this review in for free? I don't think so--eventually they will recoup these costs or stop doing business with you.

If you are a large company, I suggest you conduct a review of purchasing documents and pare them down where you can. Why? If being "silent" on a topic can cost you a lost lawsuit, the opposite is true, too--being "too noisy" in a contract. How many suits are triggered by suggestions of things that can go wrong? I would guess somewhere between a third and a half. These are things like promises made that don't need to be made (I'll blame the sales department, not the lawyers, for throwing these in).

What makes a good minimalist contract?

• Description of what you want
• Description of what you don't want
• Delivery schedule
• Bonus/penalty around delivery schedule
• Payment schedule
• Force Majeure clause

Just in case you get into court know this. Courts look more favorably if you have a balanced contract--that is a bonus/penalty clause instead of just a penalty clause.

Tie your payment schedule to defined, completed tasks.

This is it. From my experience.

Now, to protect myself from the lawyers, be it known that nothing I have said here shall be construed as legal advice!

Be safe and we will talk next week.

If you want a deeper dive, click here.

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