Get in touch today: 0800 133 7948 or Email us
Talk to an expert: hello@atlascode.com

Doing business on a handshake

Posted on: May 20th, 2011 by Simon Swords

Each new project we take on generates a new set of legal agreements.  We do this because our solicitor, like all solicitors, tells us that this is a requirement of doing business.  The first question a solicitor will ask you when you fall out with another party is – “do you have a contract in place?”.  If the answer is no, prepare yourself for a long, drawn out (read expensive) legal battle.

But why?  Nobody seems to question this.  This legal overhead is largely a western approach to doing business.  Businessmen in the Far East for example are much less likely to turn to their solicitor in times of legal conflict.  Rather in the event that you don’t do what you promised, your customer will simply never do business with you or anybody associated with you. The punishment being that the shame you will feel will far outweigh the punishment a legal battle would bring.

This results in an excessive focus on fulfilling the contract to the last word than on what it is that you set out to achieve. Anything that goes beyond what’s in the contract, however useful it may be to achieving the ultimate goal, is almost always never done.  This is especially true in the world of software development where three little words – “change of scope” – will strike fear in to even the most hardened project manager.

It also hinders creativity, as people are narrowly focused on what’s defined in the contract. Companies try to limit their scope to things they are confident of achieving. Contracts give little room to set ambitious targets or look at unconventional approaches to solving a problem.

Even lawyers see the risks of complete contracts.  If you read the Dean of Duke’s Law School’s honour code you would expect a detailed contract written by solicitors for solicitors.  Not so – instead you will find a simple statement of fact: “If a student does anything the faculty doesn’t approve of, the student won’t be allowed to take the bar exam.”  This is in essence a handshake agreement!

I look forward to the day when contracts are resigned to a thing of the past.  It’s clear that complete contracts are inevitably imperfect but I understand a handshake agreement is still too bold a step for most.  Therefore rather than attempting to create complete contracts that mutates goodwill into legal trickery how about we work to incomplete contracts that rest on the understanding we share of appropriate and inappropriate behaviour?

P.S. If you want to watch a really funny and insightful video about doing business while we’re still in this crazy agreement driven world – check out “F*ck you, pay me”, a http://vimeo.com/22053820 from Mike Monteiro of http://www.muledesign.com/ fame.

Simon Swords

Director

Managing Director

Want to stay up to date with the latest software news, advice and technical tips?

Loading
;