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Contracts - Worth the Paper They're Printed On?

Posted by Attorney Stephen Hance | Jun 14, 2013 | 0 Comments

We have all heard the cynical quip “contracts are not worth the paper they are printed on” and the question is: Well...are they? Sometimes it seems even to me, a veteran contract litigation lawyer, that they are not, and there are good reasons for that.

The number one issue relates to the cost of fighting. Lawyers are prohibitively expensive and the procedures, in district courts particularly, often enable a determined opponent to delay and add cost to an already lengthy and expensive process. As such, it is not uncommon that the amount at issue does not justify the cost of litigation. Frankly, depending on the circumstances, we have questioned whether breaches were worth pursuing in cases where $50,000 or more was at stake.

The second most important concern is whether the party you are chasing has anything to chase. Often, breaches of contract occur where a party runs out of money and/or goes out of business. The adage “you can't squeeze blood from a turnip” applies here. It is no use to spend good money pursuing a judgment when your opponent has no assets to satisfy the debt.

On the other hand, in cases where the amount at stake justifies pursuit and where your opponent has means, the written contract almost always dictates the outcome in contract cases. Also, the contract often is useful in preventing your opponent from bringing up unrelated or pointless issues in contract cases and often, the contract requires cheaper alternative dispute resolution procedures, such as arbitration. Further, the contract may require your opponent to pay your attorney's fees if you win. Finally, if appropriate, contracts can call for security or guarantees that make it more likely that you will recover if things go wrong.

In the end, while it is true that in some circumstances, contracts can become meaningless, carefully drafted agreements can be used to minimize those inevitable uncertainties, and they give the party that complies a definite advantage in the event of a breach.

About the Author

Attorney Stephen Hance

Steve represents and advises clients that are dealing with business and real estate disputes. Steve is an investor and business owner, and his approach is unique from other attorneys.


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