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Beware of -- Or Befriend -- the Crafty Lawyer

By Richard B. Barger, ABC, APR

Originally Posted
Updated



"Litigation is only better than nuclear war as a problem-solving mechanism. It diverts you from making money in your business." Ah, a lawyer who really, really "gets it," from the business perspective. That would be John Conlee, Ph.D., lawyer and business law professor from Wichita State University, who knows a thing or two about contract law in the business setting. "You want a lawyer who is not afraid to go to the courthouse," Conlee says, "but who doesn't feel the need to go there. You want a lawyer who has a sign on his desk that says, 'Can Do.'" If you wait to see counsel after a contract is formed, they can tell you:

  1. Whether it is enforceable

  2. What the terms you have agreed to mean

  3. Whether you should continue to practice law without a license

Old lawyer's joke, har, har. Folks you deal with, Conlee says, will give you a nice-looking contract on a "take-it-or-leave-it basis." But it takes two to tango. Just because something is nicely typed in small type on thin paper doesn't make it sacrosanct; you own a word processor, too. Promises, Promises. Then Excuses. Conlee discusses the World's Fair of contract law issues: - What promises are enforceable? - What excuses work? - What remedies are available? It turns out that not all promises are enforceable. Did you have the capacity when you entered into it to understand the agreement? Or were you stoned out of your mind? What you are seeking must be legal. You hire someone to kill your mother-in-law, but you would be hard put to find a court of law that would force the promise to be fulfilled, unless they really, really disliked your mother-in-law. Your car breaks down, and you tell a passenger, "You can have the darn thing." He doesn't get the car, for the promise was gratuitous. "I plan to give you $5000." Not enforceable, unless you provided me something in return. The law will enforce bargains, but not gifts. But if you're a merchant, watch out. A set of rules is evolving that is more generous to the consumer and more onerous to the businessperson. You may be able to get out of a contract, if you can prove fraud or misrepresentation (obviously), a "bilateral mistake," undue influence or duress, an impossibility to perform, or commercial impracticability. What's a bilateral mistake? That's when both parties are mistaken about the same fact, which is a basic assumption on which the contract is made. Back in a Comfortable Position If a contract goes bad, what happens? Courts have decided that the non-offending party must be put in the same economic position that they would have been in, had the contract been performed. As we all know, it is better to get everything in writing. That way, if you later need to force compliance, courts will have something to go on. Offers can be withdrawn, but not for specially manufactured items. If you make a handshake deal for 400,000 printed calendars with your company's logo, "just like last year," you can't cancel once the calendars are being manufactured. This oral contract would be enforceable. If you can't get a signed agreement, at least cover yourself by creating a memo of understanding: "This will confirm yesterday's oral conversation; here are the details." Although it's much better if the other party acknowledges your memo, such a document will help if the other party reneges on the deal. Lawyers come up with the most interesting examples. A bank sold a file cabinet with broken locks “as is.” Turns out, the cabinet contained $6.2 million in bearer bonds. The lawyer's advice? "He should have called the bank and said, 'I don’t think you meant to sell me file cabinet "as is," and there’s some stuff in it that has some value and that I think you’d want back. Would you give me a finder’s fee of 50 percent?' Settle for 10 percent and be happy." What's That Information Worth to You? But surely they'll want to know what's in the cabinet. What then? Stonewall, Conlee says. One of the things you’re selling is the information about what is in the cabinet. Ah, crafty. “Crafty” is a compliment to a lawyer. In the real case, the lawyer wasn't similarly crafty, and the buyer had to return the bonds. We've all heard of express v. implied, mostly in conjunction with warranties. However, the terms apply to other contract issues as well. Something express is put into words, whether in writing or orally. Implied is based on your conduct. You go into your local coffee shop, sit at your usual stool with your usual early-morning scowl and your nose buried in a newspaper. Nothing is said, but your usual waitress brings you your usual cup of coffee. You owe for it. Express Warranties:

  • Affirmation of fact or promise

  • Description of goods

  • Sample or model

Implied Warranties

  • Implied warranty of merchantability: The goods must be fit for the ordinary purpose for which such goods are intended

  • Implied warranty of fitness for a particular purpose

You disclaim the implied warranty by saying, “AS IS.” Say, "This express warranty is given in lieu of all other warranties, including the implied warranty of merchantability." Be sure to use the term "merchantability." Conlee also offers a couple of thoughts on employment law. Unless there is a contract for a specific term, most of us are "employees at will." Because we can quit at any time, the company can fire us at any time. As with all aspects of the law, there are exceptions. If you're a whistle-blower or refuse to perform an illegal act or are called to active military duty or sit on a jury, they can't fire you. For that. That Damn Green Shirt! But "if you come to work for the third day in a row with a green shirt on, you can be fired, no problem," Conlee says. "Even if you hadn't been warned." So long as it isn't provable that the employer discriminated, you can be fired. What if an employee is accused of some internal wrongdoing? Company says, "Our lawyers will represent you." Your question: "Who is your client? Me, or the firm?" The likely answer: "They’ve hired me to take care of your interest." "So you’re THEIR lawyer?" "Yes." If the lawyer is working for someone other than you, you'd better strongly consider hiring someone to represent your interests. Conlee offers this practical bit of advice on non-compete agreements: Rather than fighting an employee leaving and taking business and clients, say, "Go, take the client, but send us the first two years' billings." He also likes mandatory binding arbitration in commercial settings. "It is important that the decision be made, not that it be fair," he says. "I went to law school, not to justice school." Spoken like a true lawyer.

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