Newland's Business Notes

Why Write It?

Volume 8 Issue 4 -- July/August 2004

ďIím sure we all agree upon, and will remember, the important elements of this meeting and our understanding; therefore, there is no need to put pen to paper.Ē

Surprisingly, there are people who have enough faith in the future to believe that an understanding, like the oral one above, will be carried through indefinitely and that the memories of those participating in the meeting will not fail or falter. 

The contrary view, humorously stated, is  ďOral agreements are not worth the paper theyíre written on

It is unrealistic to believe that memories will remain intact and that parties will continue to get along forever.  They donít and they wonít.  Memories fade, and people donít always agree about what happens in the future, particularly after the passage of significant periods of time.  

Why Written Agreements Are Essential

Written agreements are essential when parties disagree.  If circumstances never changed and if all ventures succeeded, then probably there would be little need for written agreements. 

However things do change; situations do go bad; and unexpected problems do arise.  Itís the bumps in the road that create the trouble - the divorce or death of an associate, expansion of a business and bringing in new employees who donít see things the way the principals do, the faltering marriage of an adult child who is an owner of the business, and on and on.  A list of possible contingencies could go on forever, but it suffices to say that we all know that things can happen that will adversely affect business relationships. 

A written agreement does not prevent bad or unexpected things from happening, but one of the benefits of having a written agreement is the ability to state in advance and agree upon what would happen if, for example, a business associate died or what would happen if a part owner wants to leave the business and how he or she should be paid for his or her interest. 

Another reason for considering written agreements is the diversity of people and cultures which inhabit the United States.  Here, in Northern Virginia, there is a staggering diversity of heritages and geographical and ethnic backgrounds.  People with different perspectives tend to view problems differently.

Because of this diversity, having business agreements in writing has been perhaps more important in this country than in countries such as Japan where there is greater homogeneity of population and thought.

Planning for the Written Agreement

Often the value of written agreements lies not so much in what they say but also in the process of getting to the point of writing. Thinking about what should be in the written agreement and how certain foreseeable problems or changes should be handled is often more valuable than the actual words chosen for the agreement.  One way to guide this process is through the use of checklists.

In our law firm, Newland & Associates, we make extensive use of checklists that outline common problems or common issues that arise in typical situations. 

The completion of the checklist is, in many instances, more important than the document produced from the checklist.  It is the interchange between the participants in the transaction addressing various problems and leading up to the final conclusion, that is often more valuable than the finished product.

When preparing a written agreement, it is common sometimes for a new or inexperienced attorney and a lay person to take an existing agreement, simply change the names of the participants, and assume the job is done.  Far from it.  Taking an existing document and not reviewing the range of likely issues and available choices can be quite disastrous.

As a practicing attorney, I can say there is no need for a written agreement so long as the participants can give their absolute assurances that there is never going to be a problem in the future.  Until the world reaches that stage of perfection and certainty, it is essential that you get it in writing.

Does an agreement have to be written by an attorney?  No, but the well informed process of considering what should be in the agreement, guided by a checklist or practical experience, is essential.

If you need help with planning and/or drafting an agreement, give Newland & Associates a call.

Copyright 2004

Published by the law firm of Newland & Associates, PLC
9835 Business Way
Manassas, VA 20110
Call us at (703) 330-0000 for a full range of business law and tax-related services.

While designed to be accurate, this publication is not intended to constitute the rendering of legal, accounting, or other professional services or to serve as a substitute for such services.

Redistribution or other commercial use of the material contained in Newland's Business Notes is expressly prohibited without the written permission of Newland & Associates, PLC.

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