Yu Jian Ong
Civil litigator, corporate & commercial lawyer and business legal advisor
If I had RM1 each time someone said “no need waste time sign contract all lah, we trust each other, we brader brader” only to end up in court years later, locked in a bitter and long litigation with his brader brader, I’d be rich.
Actually, if everyone were to conclude businesses with just a “gentleman’s handshake”, litigation lawyers would be very rich, so I really don’t know why I’m writing this.
But, as most litigators are dumb, I’ll let you in on one of our biggest trade secret: you can shave off huge chunks of your legal fees of a contract claim if your lawyer didn’t have to sieve through messy texts, listen to hazy recollection of phone conversations, dive into ancient emails and decipher unreadable handwritten notes in order to come up with half decent legs for your case to stand on, at court.
Trying to enforce something that has no record is stressful, takes up a lot of time (and money), and it unnecessarily makes a simple contract turn into a whodunit mystery. Most importantly, it reduces your odds of enforcing a straightforward “open and shut” claim to that of a coin flip.
You can help yourself, and your lawyers, by simply writing it down. It is that simple.
I know, sometimes commercial reality does not allow you the luxury of time to get a contract properly drawn up for every offer, acceptance, waiver, variation or any other points of discussion to every deal that needs to be closed yesterday, by today.
So what do you do? How do you strike that sweet spot between being a swift closer and avoid being a sucker caught in a bad bargain?
Here are 5 quick tips that would help:
Tip 1
Send a quick text or email to confirm something that was discussed – and agreed upon. Make your language simple, clear and unambiguous. If you’re going to text “eh, so we confirm we agreed to do that thing for that price then you will send those stuff to me when the time comes, ya?” you are better off not writing anything. Get the important details down; numbers, price, due date, time, specs and the works. You’re not a virgin at prom night, don’t be shy.
Tip 2
Always remember that every deal must have few important things: what the deal is, any duration or timelines for things to happen, the price or value of the deal, what happens when someone defaults or wants out or fails to deliver, any interest or penalty if the deal breaks down, address that parties want to communicate, what happens to each party when the deal ends and which law or court to use if there is a fight (if the deal involves foreign parties). There are many other terms but if you cannot remember all, just remember these few. Again, get down to the brass tacks if nothing else.
Tip 3
When you send the confirmation text or email in Tip 1, remember to copy a trusted third party as well (and to be safe, send it to another email of yours). This is in case you lose access to your email or your phone. This is backup. Screenshots of important texts or emails will also be useful. Get it all stored in cloud. If you’re not good with language or no time to type everything out, an alternative would be to narrate everything into a voice recording or note and sending it to the other side to confirm. It’s better to appear cheong hei now than be left hanging holding nothing in your hands if things go south.
Tip 4
Always respond, and always seek a response. This is for any changes or variations discussed after main deal has already been done. A lot of people think “silence is golden” but it can backfire if the other side slips in a “reverse confirmation” for a variation which they want. Something like: “Bro, I was supposed to pay you 10k today but something happened. I can only pay you 2k now and the rest I pay 2k for the next few months. If you have no objections, I take it you ok ya?” Silence by you, and a 2k payment made by the other side, boom, you may have just given him grounds to argue “variation agreed by conduct”. Be careful. If you disagree with anything, let the other side know ASAP. It is not good to “ghost” or keep mum in a business discussion.
Tip 5
Seek clarification if you don’t understand what someone is saying. Sometimes, you don’t want to offend the other party or look stupid by clarifying too much. But when your other side is using lingo or abbreviations that you don’t understand, it is best to call it out and seek clarification, in writing. Otherwise, you may be invariably agreeing to things which you have no idea about.
Bonus Tip 6
For the love of god, if you’re not legally trained, do not scour the Internet for template contracts, or mash together template contract terms you found online, into your own do-it-yourself patchwork of a contract. And for the double love of god, do not sign a contract if the other side did everything I just said. Please don’t. Those patched up contracts may end up doing more harm than good if you don’t know the full legal implications of those “big words” you’ve proudly stitched together. The only thing worse than fighting a contractual dispute without a contract is one which has a contract that makes no sense. Please consult a professional when this happens (incidentally, our Patrick Lim offers 24/7 legal advisory coverage to prevent his clients from getting into situations exactly like this, but hey, we are not allowed to advertise so ignore I just said that ;).
Well, that’s about it. 5 + 1 simple tips to help you at least get a semblance of an agreement recorded for posterity in the absence of an actual contract.
But please remember; these tips are only alternatives. Ideally, you should get all business transactions reduced into simple but comprehensive agreements drafted by professionals. This removes all ambiguity, clears all doubts and protect all parties in the event of a dispute. So be smart. Do business the write way.