September 5, 2012 Leave a comment
I am not a lawyer. What I offer below is my understanding of how a contract works and is not legal advice in any way, shape, or form.
Since it appears that some people aren’t familiar with the concept of a contract, here’s some background:
A contract is an agreement entered into voluntarily by two parties or more with the intention of creating a legal obligation, which may have elements in writing, though contracts can be made orally. [snip] A contract is a legally enforceable promise or undertaking that something will or will not occur.
That’s right. A contract is simply an agreement of “here is how this interaction will work.” As noted in that definition, they can be both oral or written. In our particular case, we’ve been talking about a document, so let’s assume it’s written.
Now – depending on jurisdiction, rules, intent, etc, etc – there may be ways to verbally amend a written contract but don’t count on it. At the end of the day, whatever is on that signed paper is usually what matters. But most contracts have two important clauses of interest:
- There’s usually a clause that says something along the lines of “this agreement is the whole thing and supersedes everything else.” Basically, that means “it doesn’t matter what we agreed to previously, this is what we’re actually agreeing to.”
- The other clause offers a way to amend the contract. It usually requires it to be in writing and agreed to by both sides. What constitutes “agreement” varies, so ask an attorney on that one.
Everything else turns into a “he said, he said” argument. At that point, an email trail between the two sides describing the changes or interpretation might be useful.
If I gave you a contract and said “sign this and I’ll give you a million dollars” but instead the contract said you owed me a million dollars, at the end of the day, I have a written document and you have what I said.
So, throughout this experience, one of that things that has struck me as odd – beyond the absurdity and ongoing secrecy – is their repeated offers to “meet in person” and “put the agreement in context” without actually sharing the agreement.
Why would someone do that?
Well.. let’s put all of the above together.
If you have a contract that you want me to sign and it has some – let’s say, questionable - clauses in it. You have a few approaches. You could:
- disclose the exact content and call my attention to the points in question; or
- give me the agreement without comment and hope I don’t notice it; or
- give me the agreement and provide an explanation that makes me feel okay.
So you take approach #3, I listen to your platitudes, and I sign the contract. The most common line here is “oh, don’t worry, that’s boilerplate.”
But wait! There’s the clause saying “this agreement is the whole thing and supersedes everything else.”
So that happy explanation is rendered completely irrelevant as soon as I sign the agreement.
That’s right, the “context” is a decoy..
But then again, if that “context” is different from what is in the contract, we would have a paper trail – such as email – that would establish… no wait.
The “meet in person” part prevents that..
At the end of the day, we have a signed contract including your questionable clauses. I have some verbal “context” that isn’t documented anywhere and therefore totally irrelevant.. so who won that round?
Well played, 3 Day Startup.