Contracts and power
A written contract benefits the party with the least power.
Power might be in the form of money, access to plenty of lawyers or simply a willingness to burn it all down to the ground.
In the moment before a contract is signed, the lower-powered party momentarily has more power. That’s because the other entity wants what you have. But as soon as they have it, it’s only the contract that offers concrete protection against future events.
Handshake agreements are great when there’s an ongoing, stable interaction. As long as each side is honorable, the other party can continue to do what they said they were going to do. But when priorities or outside factors shift, an at-will arrangement can end up harming the person who can least afford it.
- Is the contract specific enough so that there’s no doubt about who is supposed to do what, even when the world changes?
- Are the remedies in the contract clear enough so that if the contract isn’t honored, the lower-power party can easily and efficiently obtain a fair result?