- On May 8, 2016
- agreement, contract, partnership, purchasing, supply chain, trust
The lie is part from our daily life, it enters our social life and our business. In our childhood we were taught to be honest and fair but our “smart” nature somehow overcomes the lessons and imposes its rules. The lie nuances are as much as the people on Earth, even more. In the same time the higher in hierarchy we are, the more cases of lie we see and willing or nor we become cunning liars or recognize the lies easier.
To trust or not to trust in such world…
People become partners in life and in business to be stronger, to stand or pass successfully through ordeal or new start up. Then why is it so difficult to walk side by side till the end, without competing who the boss is? When we start a new business or the idea is still rough, the emotions are so strong that we go into unions with great enthusiasm and faith in the future positive results. We put our heart in the cause, we work without fatigue and we go through whatever obstacles in our striving to success. But we often forget the most important: to protect ourselves and our company by establishing the rules and borders between the partners by writing the agreements on paper, by sharing the risk and the future joy. It doesn’t matter whether it concerns new business, new product or new supplier, if there is something in common, there should be clear written rights and obligations of the parties, e.g. there should be a Contract. Even when we have only a vague idea for a business partnership, there are three stages which are good to be passes consistently.
1. Confidentiality agreement
This is the first step, the first document that parties should sign before starting a new project, research, business – e.g. still in the beginning there should be general understanding that we are all in one boat and the aim is common. No information should go out. The confidentiality agreement is often neglected because middle-sized companies think that having lawyers is enough to protect them from troubles. Small companies usually do not know or do not insist on signing such contracts because this way may be they get more power (as supplier) or think that they are protected from any harm.
Signing a Confidentiality agreement is important for several reasons:
- Preventing leakage of information – because this activity may fail or delay the start and give advantage to a competitor. Actually leakage of information dooms the project to death, especially if it is a new product.
- Taking advantages from someone’s mistake – the disloyal partner may use any mistake and in future moment to deliberately harm the other partner and shark up the whole company or bankrupt his partner.
- Establishing a calm working and creative atmosphere – so that both parties feel unthreatened and can give the best to the project. When a company owner or manager knows that the company will receive adequate payment, he motivates the staff and uses all available resources to fasten goal achievement.
No contract is a panacea by itself, but every contract gives some protection. Lawyers say that broken confidentiality is difficult to be proven in court. Maybe it is difficult but it is not impossible. A person or a company who has the culture to deal with written documents and have processes or tracking systems, easily may prove whether there is brakeage in the confidentiality contract clauses. Another advantage is that in case of misusage by one partner towards any state authority, the correct partner may cooperate to the state.
2. Intention for cooperation
After the project is on the table, with so-so clear parameters, but still not all details are clear, it is good the parties to sign Intention for cooperation. According to it they agree to continue to develop the idea until it is completed. The confidentiality agreement and the intention for cooperation are just prelude to the real partnership. They define the main rights and obligations of the participants and what happens if the project succeeds or fails. Both parties understand how many efforts they will invest and what to expect in return. But they also are aware and share the risk of failure.
3. Contract for partnership
The contract for partnership is obligatory if we want to work smoothly and reveal our teams’ potential. Nevertheless if it was preceded by the other two documents listed above or is directly applied, the contract is invariable part of our business relationships. It contains details about who is doing what, how things are done, what results are expected and how revenue and loss are split. Based on this contract the heads of departments allocate resources and report decision and implementation effectiveness. In order to avoid the role of the sparrow which has done the whole work until the fox was upholding the sky (from the fairy tale “The sparrow and the fox”), it is compulsory to consult a lawyer before we sign the contract. The contract gives us security to sink 100% into a project or partnership. Even if there is any try-on or theft, we may seek justice. Even the judiciary works slow, it somehow works and if we blow out now, in future moment justice will be applied to our case too. And without a contract we and our team would have worked, free of charge, for someone else.
In summary, if both parties want to work conscientiously and on behalf of their union, they sign a contract. If any partner does not want to sign a contract, we have to think “why”, what his purpose is and whether we want to work with him.
There are some frequently met mistakes which have led to non-signing of a contract, gaps in the contract or breaking the procedures for contract authorization which mistakes later are very expensive for the losing company:
1. Attacking the ego.
Phrases like „we know each other, I’ll not lie you“; „don’t you trust me“; „this formalities are useless, we want to work not to deal with papers“ and other catchwords in this spirit aim to destabilize the partner and incite him to blind faith. Some managers’ ego may not stand these attacks – these managers step back because they seek approval. But boobs happen at once, swoop with bang to the naïve person. I’ve witnessed how a high level manager lost his job and his department was thoroughly checked because he thought that he is in friends’ relationships with one supplier and thus he did not send the contract to the lawyers for review. It appeared that the supplier had written in the contract clauses which were not discussed at all. The firm bared limited loses thanks to the strict post control in the organization. If this had happened in a small company or start-up, the cheated partner would have done the job, would have bankrupted and the incorrect partner would have received all benefits.
2. Starting work without a contract.
Starting any project, without a signed contract, we show that we are ready to work free of charge. The other party sees the enthusiasm and decides to use it to the max, so that the bigger part of the job is done even before we insist for signing a contract. Taking the advantage happens in the classical way with compliments, requests for help and pat on the shoulder. So we and our team are in uneven situation because the work done till now usually is not subject of the contract and is belittled as time and value. And then only the undone job should be split. But … the result comes after all tasks are completed (before and after the contract) – e.g. one partner does more work while the profit is split.
How to recognize if the partner is inclined to lie to you?
- Delays signing of the contract. If there is always something more important (tasks, meetings, customers) and regardless of the appointments set for discussing the clauses your partner postpones signing the contract, be careful with him. Either he cheats you and you are a contingency scenario or he does not wish to sign a contract, just wants to benefit from your labor.
- Throws more and more new ideas and asks from you action in shorter periods, but the contract is not signed yet. Pushing with deadlines is a nostrum with high effect on the executive’s psychics. If your nerves are unstable and you worry that may be you will drop out of the project/partnership, you radiate signals of desperation and put yourself in a position of a hired person, not a partner. These signals are tangible and you become a victim of manipulation. Thus you have to hold your grounds and not to start working until the contract is signed. If your partner is decent, there is no reason he to avoid signing a contract.
- Just he is supposed to sign the ready contract, and he adds another obligation for you or new split of the profit. In such cases you should not step back without adding something in your favor.
- Your partner tries to involve you or your colleague in illegal or semi-legal activities. For instance pretending that he needs support in translation, he uses your employee as a translator. Later you understand that your employee has translated a scheme for insurance fraud. Binding in such a way shows that your potential partner is inclined not only to lie but also to involve the rest in his schemes so that he is not caught easily.
Every manager carries the inner flame and desire to be the first and to do something great. And thanks God it is so, otherwise the world would have been in deadlock. But it is important too how the aim is achieved – via honest methods or by tricking the partner. The points of view from both sides, the cheater and the cheated, are different because their realities are different as if they live in opposite worlds. Should we trust in the world we live in? Sure, but we need safe guard too. Our labor and our staff efforts should be used on behalf of our company prosperity. And because we are people and sometimes we make mistakes, we should take measures in advance to protect our company. And the simplest weapon against lies and partners evasion is to sign a contract on time.