Letters of Agreement: Do Not Rely When You Reply
October 7, 2014
So, this is my new portrait (see right), after reading Geoffrey James’s ridiculous new article, “The Other Email That Every Salesperson Needs” on Inc.com (click here for our archived .pdf of this gem). The subtitle reads, “In many cases, you don’t need a formal contract just a simple letter documenting what’s been agreed upon.” WRONG!
First of all, let’s just get one thing straight. If you have Offer, Acceptance, and Consideration, you have a contract. Period. When you express in writing the terms of such an agreement, you then have a written or “formal” contract. So, this “Letter of Agreement” Geoffrey is talking about is a contract. He even says so. He says, “It’s a contract, but without the legalese.” Clearly, Geoffrey–not being an attorney–is unfamiliar with the current trend in legal writing away from “legalese” and toward using plain language in the drafting of legal documents. There is no excuse for Geoffrey’s ignorance; this is not a new trend. This shift has been happening for at least a decade.
Geoffrey suggests that in cases where small amounts of money are involved, it’s okay to just wing it, to do it yourself (DIY) when it comes to your contract. He says:
“For example, suppose you’re a freelancer web editor and a startup wants to pay you $1,000 to edit their website. Hiring a lawyer to draw up a contract would cost more than you’re being paid, so you create a letter of agreement to define the details of the engagement.
Similarly, if a division of a large company wants to subcontract an engineering project to your small firm and get the job done quickly, the GM of that division may prefer a letter of agreement, rather than getting the corporate lawyers to draw up a formal contract, which might take weeks or months.” (Inc.com)
I read that, and that’s when my head went…
No! Okay, Geoffrey? Just no. You are wrong. You could not be more wrong. This is terrible legal advice, and it is being given by someone who is not a lawyer and has absolutely no legal credentials whatsoever.
Geoffrey goes on to enlighten us with his legal acumen:
“A letter of agreement is much shorter and clearer than a formal lawyer-written contract. And that’s the point. You use the letter of agreement to bypass the participation of lawyers lest they impede the deal.” (Inc.com)
A good business lawyer’s job is to give you the information you need about the legal issues involved in the deals into which you enter. If you don’t consult a lawyer, if you don’t have the lawyer draft the language of your contracts, you choose to forego the benefits of legal counsel, and you open yourself up to making incredibly bad business-legal decisions. There are many deals–even deals involving seemingly small sums of money–that lawyers should impede! A good business lawyer will not impede a good business deal by providing you with their legal services, whether those services are merely legal counsel or contract drafting.
Geoffrey accuses lawyers of “say[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][ing] ‘no’ to anything new and lard[ing] up contracts with ambiguous legalese.” I have no doubt there are lawyers who do this, but here’s some free advice: Just don’t hire those kinds of lawyers. Just because there are some bad lawyers out there, that does not mean you should try to write your contracts yourself. Just because some doctors commit malpractice, does that mean you should attempt surgery yourself? “Oh, it’s just a minor surgery,” you may say to yourself, “How hard could removing an appendix be? I’m as smart as any doctor. I can handle it.” And then you die of sepsis.
Geoffrey is right about one thing: “many business deals can be finalized with a simple letter of agreement.” But if you rely on that “simple letter of agreement”–or the legal advice given by a non-lawyer like Geoffrey James–you are an idiot. Executive Legal Professionals is just one law firm among many that would be pleased to offer you a value-based fee for contract drafting services. If, as in Geoffrey’s example, above, your contract is worth only $1,000.00 to your business, Executive Legal Professionals is not going to charge you $1,000.00 to draft it. In fact, at most, we might charge a couple hundred dollars, which is less than what it would cost you to pursue a lawsuit against the other party to the contract for Breach of Contract if that “simple letter of agreement” fails you, which it probably will–maybe not today, maybe not tomorrow, but soon, and for the rest of the life of that deal.
Preventive Law works, and it saves businesses money. To forego legal services for your business is incredibly unwise. Don’t do it, just because some “author, speaker, and award-winning blogger” is willing to tell you something you want to hear. Geoffrey James is not a lawyer, and taking advice from non-lawyers is about as wise as taking medical advice from people who are not licensed medical professionals. You’re going to end up hurting yourself, and having to hire a lawyer to fix the mess you make. Isn’t it better to hire a good business lawyer who will charge you a reasonable, value-based flat fee, and avoid the mess in the first place?
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