Keep Your Word: A Contract is a Contract

I remember as a youth when older family members would nostalgically recount days when major business deals were made with a handshake, and how much the country has changed – that orchards they used to play in were now developed with big box stores, highways, parking lots, and rows of houses. It’s the anonymity that our increased population brings that allows us to forget the importance of our reputations, our word. A person no longer fears the scorn of shame as he walks about town after having reneged on a promise or mistreated a business partner. Nobody knows you anymore – the world is too big a place for that. Now we have the courts and arbitrators to handle every grievance, no matter how small and avoidable. I remember learning in the 90’s how the Japanese consider it a shame when business deals break down to the point of contention, or worse, litigation, as intelligent people should be able to resolve disputes through amicable and sensible conversation. I agree.

A contract is a contract. When you promise to pay a man for work he performs for you, you have to keep your word. Regardless of whether you can slip through the cracks into anonymity, foist some false-hearted or meager defense, or point to his relative wealth in comparison to your own financial austerity, we must all keep our promises to the very best of our abilities. True, on rare occasions, it is factually impossible or objectively impractical to keep your promise. For example, let’s say you promise to build a house for somebody on a particular lot after she pays you a million dollars to do so, but then an earthquake destroys the terrain or nuclear waste is found in the soil; then sure it may be actually impossible or reasonably impractical to keep your promise. Or, perhaps you were actually pressured with duress, undue influence, or fraud into making the promise in the first place, like for example you are mentally challenged, somebody put an actual gun to your head to sign a contract, your signature was forged on an agreement, or you were told your money was going to be used to buy an investment property when actually your money was going to be used to buy some charlatan a trip to Bermuda. But let’s be real, these kinds of scenarios are relatively very rare.

Most often in contract disputes, one of the parties is simply refusing to keep their promise and trying to hide their tracks with denials, finger-pointing, and other manner of obfuscation. As an attorney, I see this all the time, whether the dispute involves Prenuptial Agreements, Business Investment Contracts, Residential or Commercial Real Estate Leases, Intellectual Property License or Non-Disclosure Agreements, Education Contracts between Students and Private Schools, Employment Contracts, or Wills and Trusts. So many expensive and ugly disputes can be ethically and efficiently resolved if the parties would simply keep their word.

We have a Social Contract with each other as individuals in a Free Society to ensure peace among us, to help us all freely enjoy our lives, and to promote the progress of humanity over daily and more monumental challenges. This Social Contract requires us to act ethically. It is ethically central, therefore, that we understand the importance of keeping our promises. A contract is simply an exchange of promises. If we break our word and breach our contracts, our Society will degenerate into Chaos, our courts and arbitrators’ offices will overflow, we will become strangers and enemies to each other, and we will see the signs of our failure to build a beautiful culture in all corners of our world – in the decline of our economy, in the corruption of our political system, in the robotic coldness of our disputes, in the aggression of our arts, in the divisiveness of our houses of religion and spirituality, and in the anonymity of our sidewalks.

Business LawAli Shahrestani