The one legal certainty in an uncertain world
Spencer Laymond
M&A Lawyer | Specialities: Buying and Selling Businesses; JVs; Shareholder Agreements; and Opticians
One of the oldest legal concepts dating back to the start of civilisation, which still impacts everyone today, is the humble put powerful law of contract.
In my world as a business lawyer, contracts are everything. They can be big or small. They can be simple or complex. They can be significant or insignificant. But the contract is there always. There to serve a situation, as much to serve society. Assuming properly written and compliant, the contract records the intentions and understandings of the parties bound by the contract. The contract evidences and regulates enforceable obligations in line with principles of fairness and certainty.
The contract, in essence, enables us to get on with life. Or does it?
The more recent development of contract law over the last 600 - 700 years, from the origins of the early “law of assumpsit”, is a fascinating study in how society and legal principles develop. Indeed, as Goerge F. Deiser wrote in the 1912 Harvard Law Review (Vol. 25, No. 5): “The reader of… “The History of Assumpsit”...will recall the tugging, twisting and straining to which the common law was subjected before the action of assumpsit became a member of the common law…”.
Today though, contracts have come a long way. We live in a swipe and click automated society. We Amazon and Ebay. We take bank loans and car leases. We feast out on the Gig Economy with pizzas and home entertainment on demand.
Contrast the position with more significant personal contracts say for a mortgage, buying and selling a home, that “contract” with your spouse (and the bit about “in sickness and in health”) or the contract with your employer. Those sorts of contracts tend to take a bit longer to finalise, but ultimately, we can still very easily get into them.
If we are being honest:
Have you ever wondered why we need so many consumer protection laws and regulations. Is it always to protect us against unscrupulous businesses or protect us from ourselves?
In business, it is not so different. Businesses buy and sell, invest, joint venture, enter into strategic alliances, collaborate, rent, licence, borrow, create, employ, consult, provide, deliver and much more. All these activities involve entering into contracts, formal or informal, written or unwritten, made by?directors and partners either individually or as a collective.
Contracts and change
In the UK, our modern contract law principles have been developed over the last 600 - 700 years by the courts and Parliament, and it is a continuously evolving program of contract principle refinement. If you get to court the question may be whether the judge will follow precedent or find a way, if it is possible, to do justice in the case by finding a new distinction on the facts.?
But the pace of change seems to be getting quicker and quicker.?
A few of the big stand out legal changes affect businessing law over the last 20 years include:
But squashed into the last few years alone the level of the significant legal changes has exploded. For example:
In business there are so many more significant changes and considerations, including:
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One staple in a changing world
So much change, but again through it all, what's the one staple? It is the contract.
But the contract itself does not standstill. No.
Electronic contracts and e-commerce may have been around for decades, but is it not the case that the computers are still taking over? for example:
Maybe if the future for humanity is one of the cyborgs taking over, our whole lives will be scripted by super long term contracts we don't even have a say in.
For the time being, contracts are everywhere and permeate everything we do. There is no escaping the fact, understanding how contracts work, can be a helpful skill to have.?
The fundamentals of any contract is certainty. For example, price and payment are the primary terms: I am spending ￡x for Y. But there is so much more to the contract terms including issues such as: confidentiality, change control, compliance, breach, damages, force majeure, frustration, entire agreement clauses, limitation of liability clauses and so on.
Making great contracts should be simple stuff, and everyone should be able to master the contract? Unfortunately not so. I am twenty years in and still learning a thing or two. Many businesses are built on creating and negotiating contacts, and many more businesses on fighting and destroying them.
Two Guiding Principles
Confronted with change everywhere, is there a simple solution to our lives which revolve so much around contracts, whether we like it or not??
One guiding principle I have is: “Learn Contract Law” and “Become a Lawyer”.??
If you have no time or appetite for that, my second guiding principle is to get in touch with your friendly neighbourhood contract lawyer. By the way I cover North London!
Good luck with your contracts.
Spencer Laymond is a business lawyer who has acted on hundreds of business acquisitions, joint ventures and agreements in a multitude of industries, including optical, property development, care home, legal and accountancy. If you are an?#entrepreneur?thinking about #buyabusiness, #sellingabusiness, getting into a #partnership, taking independent legal advice can be worth its weight in gold. If you want to speak with me then please get in touch.
Please note that the information in this article is for information and educational value only. No representation or warranty, express or implied, is given as to the accuracy or completeness of the contents of this article.
With thanks to Pixabay.com for the photos used in this article.