Documenting selling arrangements
Much can hinge on these vital relationships and, when they go wrong, the claims which result can prove distracting and costly.
Where businesses take the time to record carefully the basis on which they agree to work together, the scope for disputes is usually more limited. Where there are disputes, they will know how and where they are to be resolved.
Yet from our perspective as lawyers, it is remarkable how often the drive to begin to do business quickly leads to little or no consideration for recording even the most central terms governing the scope of the work to be undertaken and the reward. We occasionally hear businesses say when claims arise that they steered away from raising a point in negotiations, in case it proved contentious. Whereas we would say, “All the more reason for raising it then”! The upshot for not doing so is an increased risk of claims, and messier and more expensive claims at that.
These days, whilst electronic records created through the inevitable morass of emails, text messages, mobile messenger services and social media can provide some insight into the parties’ intentions, unravelling the complex facts can still be a lengthy and expensive process. The absence of clear, recorded terms does little to advance the commercial interests of the parties. The lesson is one which lawyers barely need repeat: it is of central importance to document clearly and procure mutual agreement to the essential terms, such as the parties’ responsibilities, how and when parties will be paid, who will own the intellectual property in the fruits of the relationship, how the relationship can be terminated, what happens when it is, and where and how disputes are to be resolved.