The primary reason we document agreements is preparation for disagreements. That is why I say partnership agreements are really separation agreements. Partners rarely look to what is written in an agreement when making daily decisions. The agreement is instead a document where partners amicably agree how to break-up before there is a tragic turn of events – a fight, an illness, death. What happens if….? The idea is to avoid having to make difficult decisions at a time when perhaps agreements cannot be reached – because, for example, one party is unable or unwilling to communicate with the other. But if the document is really for the end, then what governs business before the end? I submit the answer is trust. When we enter into a business relationship, no matter how well documented, we must rely upon some semblance of trust, hopefully more than just the baseline belief that the other person won’t screw you. It is about being fair and just, treating the partner with respect, taking what is fair, not abusing privileges, basically following the Golden Rule – do unto others as you would have them do unto you.
When making a business decision, I personally follow this rule. How would I feel if my partner did this? If I know the answer, then I should feel comfortable taking the action. If not, then perhaps I should discuss it with him. To me, this is dictated by fundamental fairness, not the terms of our partnership agreement. If we all simply adopted this rule in our life and business, we would be in a much better place today. All it takes is a moment of thought before we act. Thinking about cutting the line? How would you feel if someone did it to you? Thinking of taking what is not yours? How would you feel if someone did that to you? If we all just treat each other the way we hope and expect to be treated, the world would be a better place, and perhaps we litigators would not be so busy.
To be clear, I am not proposing that we abandon written agreements in favor of this utopian dream filled with handshake deals. To the contrary, contracts are critical, and I never recommend doing business in any way without something in writing. There is simply too much room for disagreement when things go wrong later, as they often do. Sometimes, it is a result of conditions outside our control. We all know sh-t happens. So, we put pen to paper in advance to confirm how to clean up the mess afterward. Until then, we need a layer of trust and fairness to make things work. If you do not have those, then you may not have the agreement that you think you have, no matter what the document says. Business is trust.