When I was in third grade, a kid attacked my brother because they were negotiating the use of a swing set. I think he attacked him because my brother did not meet his expectations about whose turn it was on the swing. I threw him off my brother and shoved some earth into his mouth. Actually, I fought this kid because he did not meet my expectation of not attacking my brother.
Just as the most adolescent schoolyard conflicts can be distilled down to unmet expectations, so, too, can most disputes in the business setting. As supervisors know, sometimes employees disappoint us by not meeting our expectations. We often realize, however, that such disappointment actually took root in our failure as supervisors to clarify expectations of the job duty or specifics of the project. Nearly every conflict, whether physical, verbal or contractual, costs money and is caused by the parties not meeting the expectations of the other. One way to prevent costly conflict is to clarify expectations in a contract.
The complexities of employment contracts, leases, sales of goods, or prenuptials cannot be effectively explored here; however, simply putting an agreement in writing and having each party sign it can go a long way in preventing us from ending up in the hideous place we call “court.” To that end, a basic understanding of contracts may help us produce, modify, or understand an effective written instrument and prevent or reduce conflict. A contract has four elements: the agreement, consideration, capacity, and legal object. The agreement is composed of an offer by one party and acceptance by the other party. Consideration is what a person will receive in return for performing a contractual obligation. Capacity refers to whether a party has the mental ability to understand his or her rights or obligations under a contract. Also, to be enforceable by a court, a contract must have, among other things, a legal object. That legal exchange must be the subject of the contract, and it must be able to be performed legally. When one is drafting, modifying, or reading a contract, the above four elements should always be considered.
One of the first questions to ask regarding the agreement is, “Am I contracting with right person or entity?” For example, before a party signs a repair order at an auto body shop, it would be prudent to know that the party possesses the title to the car. On numerous occasions, a client has come into our office seeking a contract remedy only to find out that they contracted with the wrong entity.
Next, think about whether the consideration is clearly stated and whether it is a mutual exchange of something of value. Often, attorneys encounter a contract dispute midstream because the terms of the consideration were not clearly stated in the original agreement. Ambiguity can be extremely expensive, so clarify what is expected of each party.
Capacity appears to be an obvious pitfall, but it can rear its ugly head in many forms. What if you smell alcohol on someone you are dealing with? I remember in the late 1980s, feeling a little worried when my parents sold our 1978 Ford Fairmont to a man that was super-intoxicated. My mom was desperate to sell the family clunker and, luckily, we never heard anything of it. In addition, many mental illnesses exhibit themselves intermittently and in varying degrees. What about minors? May a cell phone provider contract with a 17-year-old who may be a signer on his parents’ credit card?
Finally, it seems clear enough, but consider whether what you are doing and how you are doing it are legal. This comes up a lot when a homeowner uses an unlicensed contractor to do a remodel or addition. It can be argued that any contract involving an unlicensed individual in certain professions may be discharged and unenforceable. This is relevant for cosmetologists, electricians, plumbers, doctors, lawyers and teachers, just to name a few.
If we clarify our expectations, we may prevent the cost and stress of conflict, and avoid having to shove dirt into someone’s mouth. FBN
Matthew Poirier is a partner with Gonzales and Poirier, PLLC., in Flagstaff. He practices many types of law, with a focus on criminal and immigration law. More information is available at 928-774-5400 or by email, matt@tgattorney.com.
