A Contract Is a Tool. Use It Like One.

A contract is a is a tool. Like any other tool, the contract is only effective when it's used and maintained.

Over the years I've worked with a lot of companies who spend a lot of time, money and energy negotiating complex, complicated contracts that spell out in excruciating detail every little task that needs to be done, every little right that needs to be respected and every little punishment for failing to perform. They have big signing ceremonies where both Parties get to hand out gold pens and slap each other on the back, congratulating themselves for a job well done! Everybody is happy. Everybody is sure that the hard part is over now, the contract is signed. All is right with the world.

Then they print out two copies of that contract, put it into two sets of beautiful binders (because, of course, a single binder won't hold a contract that large), one for each side, and then each side places their binders in a place of honor on a high shelf in the main conference room and then...

Nothing.

That's it. That's all they do with that contract; they let it sit on that shelf, allowing the pretty binders to add an air of prosperity and professionalism to the conference room and, I suppose, to the whole company.

But that's it.

Of course they show the pretty binders to important clients and vendors. And the C-level's use them as a backdrop for all those semi-annual “see-what-a-great-leader-I-am” webcasts that so inspire “the troops”. Yup, everybody's proud of that contract.

Problem is, no one ever actually looks at the contract. Most of the folks responsible for performing under the contract will never see it. Few will ever open it, even fewer will ever read it; and virtually none will ever think to use it for the purpose it was intended – as a framework for success in planning, managing and doing the actual day-to-day work.

And then the unthinkable happens.

Disagreements between the folks doing the work. Problems arise on the manufacturing floor. Work slows.

Feelings get hurt. People start to take sides.

More problems arise. More feelings get hurt. It's “Us” against “Them”, now. Critical designs can't be agreed upon. Critical parts don't fit and don't work right. Money stops.

Now people get angry. Each side now fully focused on the blame game. Work stops altogether. Both sides now are more intent on pointing fingers and placing blame than in actually doing any work.

Eventually, of course, some smart person (usually the lawyers who, by this time, are all up in the middle of the finger pointing fight) remembers that there's a contract somewhere that might help us “get those guys”.

So now they decide to use the contract. Once again, it's a tool they can use. Unfortunately, now the only way any of the folks already involved in the fray can think to use it is as a bludgeon. So they flail around, dragging each other into court, swinging their contractual bludgeon.

And the work the contract was intended to describe? Well, it never actually gets done. The money all gets spent – on lawyers and courtrooms, incomplete designs, useless parts and the like – but nothing useful ever comes from the debacle. It's too bad, too, because the idea was a really cool one and the product would have sold millions.

Sound familiar?

It doesn't have to be this way. Written correctly, used regularly and maintained professionally, the contract could have helped both sides work together harmoniously, identifying risks and solving problems as a team.

The moral of the story?

If you're not going to use it, why spend the time, money and aggravation negotiating a contract?

If your contracts are ineffective or your projects end in disaster more often that not, leave a comment here or e-mail me at: mailto:TomFawls@Council4SmallBiz.com">TomFawls@Council4SmallBiz.com. I can help.