00:07
Adam Stofsky
David, what happens when things go wrong with the contract? When one party breaches? What happens when things go wrong?
00:15
David Tollen
Yeah, important question. So first of all, I think a good perspective on this concern is things don't necessarily go wrong with the contract so much as they go wrong in the relationship, in the business deal. And the contract might be, should be the tool for solving it. So what's gone wrong is, you know, one party didn't meet the other's expectations, one party thought the other party was supposed to deliver by a certain time or build a certain thing, and that didn't happen. And ideally the contract solves it. Because you discussed this issue in negotiating the contract, you wrote it down and so when that goes wrong, ideally you can pull out the contract and say, look, we've already resolved this, you were supposed to do this, we agreed to do that and that's the solution.
01:09
David Tollen
In fact, we often think of the contract as a weapon to use in a battle with the other party if things go wrong. But what I'm describing is the contract solving the problem. You pull the contract out, both parties see this is already addressed and hopefully you solve it and there never is a dispute from there.
01:29
Adam Stofsky
Right. So a well drafted contract addresses all those things that could go wrong. So things go wrong with the business deal, but the contract is actually, it doesn't go wrong with the contract. The contract is well done.
01:43
David Tollen
That's right. And I like that you said all those things that could go wrong because it helps me point out probably not an absolute genius contract drafter might be able to come up with everything that could go wrong. But most likely you haven't figured it all out in advance. But ideally your contract, it's going to address the most likely things that are going to happen. And hopefully even if the contract doesn't specifically address what happened because he just didn't think of this series of facts.
02:16
David Tollen
Hopefully there are rules in the contract.
02:18
David Tollen
Descriptions of how to solve problems that do give you a guide to resolving it without a battle.
02:24
Adam Stofsky
I think a good analogy to this could be like a will or an estate plan. I know a will is not a contract, but the whole point of a will is to avoid your descendants fighting over stuff by making it crystal clear what happens after you die. Is that a good analogy to a good contract?
02:42
David Tollen
Yeah, that is a good analogy. And I think a will is like a contract in a lot of ways. The process of creating a will is very similar. You're thinking about all the things that could happen. What if this, you know, what if this child dies before this grandchild and all that kind of stuff. Unexpected events and of course, you probably won't come up with everything that could happen, but hopefully all the most likely things.
