Member Cat Lincoln Speaks: Actions Speak Louder than Contracts

The Challenge:

The case at hand was brought by a CEO who was considering a new business enterprise with an old acquaintance. He was seeking advice about the contract, agreement structure and specifics of the legalese.

If you were in this situation, what would you do?

If I were in your situation, I’d consider the risk of entering into a contract with individuals who have demonstrated that they put self-interest above the law.

In our time together at the Alliance, you have demonstrated the highest standard of ethics. Nobody here would doubt your commitment to what you promise. However, be careful not to apply that confidence too liberally to others. Take your potential business partner. If you’ve seen actions conducted over and over again, they will continue, no matter what kind of agreement you have in place. In this negotiation, the only thing your partner has to think about is himself – how he will benefit from an agreement. You have to think about yourself, the law and the people who rely on you. Your burden is heavier, and that puts you at a disadvantage.

One of my first jobs was working in a compliance department at a financial company. The FTC audited us and we had to pull our paperwork and registration. The paperwork was in order thanks to the diligence of those in charge of the filings. The crossing of the "Ts" and dotting of the "Is" rarely leads to large issues. In that experience, the big problems that were unearthed came from an emotional need to do something different, whether it is an affair, an incorrect use of money or anything else. In those circumstances, it doesn’t matter what was written in the agreement, or paperwork or law — people were doing things for emotional reasons, not legal reasons.