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Monday, March 5, 2012

Try With All Your Might. You Will Never Get It Right!

Agreements are an essential part of business.  In my article, “If It Walks and Quacks Like a Duck, IT MUST BE A DUCK!”, I highlighted the need for mechanisms for resolutions of conflicts stemming from agreement disputes.  Preparing agreements to cover working relationships takes a significant amount of time and energy.  The costs of the legal work can be excessive.  Given the time and cost contributed by the company coupled with high quality legal teams, it is surprising that issues ever come up that are not clear in agreements.   

One of the first things to recognize is that a few years after completing an agreement, the language and/or interpretation may no longer fit the situation.  As soon as a conflict arises, the other side starts to interpret the wording in the agreement differently.  The differing interpretations often come about in an effort so seek an advantage in negotiating new issues.  The back and forth will certainly increase the tensions on both sides.

Keeping notes at the time of contract generation that provide some understanding of the initial intentions may be helpful.  This does not mean the other side will agree that their understanding was the same at the time the contract was completed.  The discussions to resolve the differences can be a problem when the two sides want something very different.  For example, in one case an organization licenses a product to a company.  The organization believes the license covers a narrower scope of uses than the company believes is in the agreement.  The original discussions are long forgotten and maybe the original negotiating individuals are gone. The new situation places the organization in the position of trying to extract more money or license parts of the technology to a different business to increase their revenue potential.  The company does not want to pay more money and believes they have an exclusive.  The conflict places the two on opposing sides and without a mechanism to resolve the issues, the process will only grow worse.

The potential for future conflicts makes it worth significant effort in creating clarity around the language and definitions while drafting of the agreements.  Futuristic thought has a value in considering issues that may arise during the working relationship.  In addition, adding some type of dispute resolution mechanism helps.  Even with a great agreement, but do not expect to predict all issues or circumstances because it is not possible to predict the future.

This brings up the point of this article.  You will never create an agreement that will cover all future issues.  In fact, do not be surprised if the language has a different meaning to the parties a few years later.  This is especially true in conflict situations.  An attorney once stated to me, “I have never written an agreement that meant the same thing to all the parties 5 years later.  I have experienced this issue a few times personally!

In short, “Try With All Your Might, You Will Never Get It Right.”  When developing working relationships, try to keep things on a friendly basis and make sure you have real partners that work with you.  It is much easier to work out problems with people trying to accomplish like goals.  It is also much easier when both sides see a Win-Win relationship.

Taffy Williams is the author of:  Think Agile:  How Smart Entrepreneurs Adapt in Order to Succeed to via Amazon