Law firm billing and accounting requirements are inherently different from other service businesses. Even among legal practices, billing requirements can vary greatly from one area of practice to another.
Because time spent on billing and accounting is administrative and not billable, a law firm’s profitability depends on capturing all billable time and expenses, generating invoices in a timely manner and managing collection efforts proactively. Another highly important aspect that sets law firm billing apart from that of other businesses is that law firm billing and trust bookkeeping come under the purview of state ethics guidelines.
Law firms today cannot function without a legal billing software that fulfills the firm’s practice-specific billing needs and helps them avoid common billing pitfalls. The top ten most prevalent mistakes law firms make, when it comes to billing and accounting are:
Pitfall #10 Not Using Matter-Based Recordkeeping
Many service businesses perform multiple types of jobs for a customer and generate one invoice that covers everything. The same billing process does not work for law firms.
Matter based recordkeeping is unique to law firms. All transaction details must be kept at a matter level rather than client level. Law firms are usually required to keep each task (called “matter”) completely separate from other matters for the same client or other clients. For law firms, matter-based recordkeeping is critical because it allows them to produce proper records with ease for client billing inquires, billing disputes or state audits.
Pitfall #9 Not Accounting for Varied Types of Legal Matters
Accounting for retainers, time and expenses, etc. will vary depending upon the nature of the matter in question. Most law firms handle a variety of cases and use an assortment of client billing arrangements , such as hourly, retainer based hourly, fixed and contingency. A firm’s billing system must be able to handle all types of billing arrangements and the intricacies of each case.
Pitfall #8 Missing Flexibility in Setting Billing Rates
Professionals (or Timekeepers) at law firms are likely to have standard hourly rates for different tasks. An attorney billing software must be able to set Timekeeper rates accordingly, support discounted rates or a previous year’s rates for old matters, without much manual intervention.
Pitfall #7 Failure to Track and Allocate Disbursements
While law firms focus on capturing all billable hours, they often neglect to properly track and allocate expenses for billable matters. Expense tracking is just as important as time tracking. If you do not allocate expenses to a matter as expenses are incurred, you might never collect them. Matter expenses you forget to allocate are lost profits.
Expenses are typically paid in variety of ways (checks, credit cards and cash), adding another layer of difficulty. A trust account disbursement, however, is not an issue because the expense will come out of client funds.
Pitfall #6 Not Preparing Customized Professional Quality Bills & Reminders
The billing process is a direct reflection of your firm and is a vital part of your client communication. While law firms are conscious of providing top quality legal services, their high standards often fall short when it comes to client communications such as invoice and payment reminders. Not only is it important to generate invoices on a fixed billing cycle, but it also equally important to prepare professional quality invoices. Cluttered and hard to understand invoices are a recipe for late payments and client questions and are aspects of legal billing that become even more important when payments are in arrears.
Pitfall # 5 Not Utilizing Built-in Software Collection Support
Many law firms let unpaid bills pile up and end up with a collection problem. Take a proactive approach to debt collection rather than grappling with the issue after the fact. An efficient law office billing software will provide built-in collection support. Don’t wait for a billing cycle, if a matter’s unbilled balance has reached a low threshold point. Remember, bill collection is an on-going and vital practice management process.
Pitfall # 4 Not Checking for Client Conflict of Interest
For most law firms, conflict checking is a must. Your firm’s roster of clients is already available in your billing system. Instead of duplicating work, make every attempt to use the same system as a conflict checker. While developing a bulletproof conflict of interest system is challenging, development in today’s computer software makes it easy to build an integrated database that quickly identifies conflicts of interest.
Pitfall #3 Not Handling Client Advances Properly
Pitfall # 3 involves a host of potential problem areas. A law firm’s cash flow and profitability depend upon client advances (or retainers). However, from an accounting/bookkeeping perspective, client advances (retainers) need special treatment and must be handled carefully. The varied nature of client advances, an initial deposit to a trust and/or operating account, and reducing balances, as fees are earned, can significantly complicate your back office operation, if your billing system is not capable of processing retainer transactions systematically.
And, apart from itemizing legal fees and expenses, a legal time & billing software must always display remaining retainer balances on your client invoices.
Pitfall # 2 Loosing Track of Trust Funds
Every law firm endeavors to keep trust books clean and accurate, but most either fail or spend significant time and resources trying to do so. Ninety percent of the trust fund tracking battle is won, if your system provides integrated billing and trust bookkeeping . The trust bookkeeping portion of the system must prevent common trust errors (e.g. ledger card overdraft), provide a bank reconciliation tool and three-way reconciliation reports.
Pitfall # 1 Choosing Complex Software and Failure to Protect Data Integrity and Security
The most common and the most dangerous of all legal billing pitfalls include trying to cope with complex software, failure to protect data integrity and implement secure measures. Technological tools are more hindrance than help, if the tools are too complex to use. Software that isn’t user friendly and requires external consultants or trainers consumes valuable time and eats profits.
Data integrity and security are a matter of taking precautions to protect data from unauthorized access and use. You can minimize threats and easily avoid Pitfall #1, if your billing system has built-in features for controlling access to data, has checks in place for error detection and a regular data back-up function.
Reap the Benefits of Legal Billing Software Development
Computers and software have changed how companies everywhere do business. Technology today allows law firms and other businesses to compete with their larger counterparts on many levels.
Choose software with care and reap the benefits of technological developments in legal billing systems. Before you purchase legal billing software, analyze program features to ensure that the software’s design can help you avoid the ten common legal billing pitfalls. The right software will not only enhance your firm’s in-house capabilities and productivity, but will also help you comply with state ethics guidelines and increase profitability.
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The employee should have an excellent working bond with their employer regardless of the nature of their work. Both parties should benefit and grow in this relationship. Salary is provided to the employees in return for their time, know-how, and abilities while the employer receives the return of investment. This sounds great. Nonetheless, but this isn’t the situation in all workplaces./p>
If the labor law or employment law is implemented appropriately by both employee and the employer then work issues won’t possibly happen. Many people might end up breaking some work laws without realizing it since these laws are quite complicated. This is the main reason why troubles in workplaces happen. In times like this, the assistance of an expert and proficient new york employment attorney is crucial.
There are different factors why work problems are occurring. This is due to the fact that personnel are not all alike. They have different thoughts and religious beliefs as well as personality and characteristics. Problems at work are more likely to take place when the employer harasses his employee or perhaps, fails to pay him according to what is specified on in the contract. Whatever work-related concerns would that be, they could be handled by employment attorneys successfully.
Main Reasons Why It is Important to Get Employment Lawyer NYC
Wrongful termination and unjust payments are the most common work-related issues that result in litigation. Accident of personnel due to dangerous work practices and sexual harassment need to undergo legal process as well. There are also many workers who have filed complaints to the court as their retirement plans and benefits are not given to them. Engaging in a legal battle requires a tremendous amount of time, money, and determination. With the assistance and representation of reputable employment attorneys nyc, workers can conquer this challenge easily.
Making certain that their clientele understand their rights is part of their responsibilities. Clearly, they know what legal action to have depending on their clients’ case. The attorney will attempt to mediate between the employer and staff if the dispute is still negotiable. However, if the issue is serious, then they will represent the employee during court hearings.
Employment attorneys who work for employees always make sure the odds will be on their favor. They will carefully evaluate documents and contracts in order to finding any glitch that could assist strengthen the case. Then again, employment attorneys who work for employers/company owners adopt an approach called -preventive lawyering’. This is a method in making firm policies that are in accordance to local and federal/state employment laws and regulations.
When conflicts on employment related problems occurs, litigation is not always the ideal solution, a fact that professional employment attorneys is aware of. Considering that filing a lawsuit is laborious, these professionals find other ways to deal with it in a different way. A person’s career, life, and name are at stake when engaging in litigations that’s the reason why they have to consider their option carefully.
The written and oral communication skill of an nyc employment attorney should be excellent. It is also best to ensure that the legal professional is specializing in employment laws, and has stayed abreast with any changes in the law. The very best lawyers are sensitive to the needs of their clientele, despite being analytical in their approach. Only with these qualities will he win the case.
When you wish to get started at tackling the issues regarding Employment Lawyer, then you should go at your own pace where you’re most comfortable with. Hastening results in a poor circumstance as you’ll often find yourself missing over particulars which are important. What you need to do is to work on it consistently and you’ll realize how advantageous this way is. For clear explanation for Employment Lawyer Nyc, just search through https://www.google.com/+YoungMaLLPNewYork.
Copyright 2006 Francesca Black
In 1619 Jamestown Colony, Virginia enacted laws ordering farmers to grow hemp. Similar laws were enacted in Massachusetts in 1631, Connecticut in 1632 and the Chesapeake Colonies in the mid-1700’s.
Even though the U.S. government encouraged American farmers to grow hemp for WWII and had even accepted it as payment of taxes in Colonial America, it is now prohibited to grow hemp in the United States.
Cannabis hemp was legal tender in most of the Americas from 1631 until the early 1800’s. you could even pay your taxes with cannabis hemp. In the mid-to-late 1800’s the 2nd & 3rd most commonly used medications were concentrated cannabis extracts and resins (a.k.a. hashish). At one time American companies Eli Lily, Squibb and Park Davis produced cannabis extract medicines but clearly that is no longer the case..
Today the THC levels in industrial hemp are so low that no one could ever get high from smoking it. Moreover, hemp contains a relatively high percentage of another cannabinoid, CBD, that actually blocks the marijuana high. Hemp, it turns out, is not only not marijuana; it could be called ‘antimarijuana.’ Although opponents of hemp production claim that hemp fields will be used to hide marijuana fields, this is unlikely because cross-pollination between hemp and marijuana plants would significantly reduce the potency of the marijuana plant.
On March 12, 1998, Canada legalized hemp production and set a limit of 0.3% THC content that may be present in the plants and requires that all seeds be certified for THC content.
In 1942 the US government strongly encouraged hemp cultivation to help with the war effort, going so far as to produce a film entitled “Hemp For Victory”. Hemp was grown commercially (with increasing government interference) in the United States until the 1950s. While congress expressly expected the continued production of industrial hemp, the Federal Bureau of Narcotics lumped industrial hemp with marijuana, as its successor the United States Drug Enforcement Administration (DEA), does to this day. Even though the US government encouraged American farmers to grow hemp for WWII and had even accepted it as payment of taxes in Colonial America, it is now prohibited to grow hemp in the United States. While industrial hemp and marijuana may look somewhat alike to the untrained eye, an easily trained eye can easily distinguish the difference.
The European Union subsidizes its farmers to grow industrial hemp. Hemp seed is not psychoactive and cannot be used as a drug. Hemp Seed does not contain THC. From 1842 through the 1880s, extremely strong marijuana (then known as cannabis extractums), hashish extracts, tinctures, and elixirs were routinely the second and third most-used medicines in America for humans (from birth through old age). These extracts were also used in veterinary medicine until the 1920s.
The illogical and unrealistic reasons for not growing hemp should be set aside now, as this crop will be a wonderful economic boon. In 1935 116 million pounds (58,000 tons) of hemp seed was used to make paints and varnishes yet it has been effectively prohibited in the United States since the 1950s.
Hemp was doomed by the Marijuana Tax Act of 1937, which placed an extremely high tax and made it effectively impossible to grow industrial hemp. While congress expressly expected the continued production of industrial hemp, the Federal Bureau of Narcotics lumped industrial hemp with marijuana, as its successor the United States Drug Enforcement Administration (DEA), does to this day. While industrial hemp and marijuana may look somewhat alike to the untrained eye, an easily trained eye can easily distinguish the difference.
No marijuana grower would hide marijuana plants in a hemp field. Marijuana is grown widely spaced to maximize flowers and leaves; hemp is grown tightly-spaced to maximize stalk and is usually harvested before it goes to seed. It is also the first place where law enforcement officials would look. No one would want to smoke industrial hemp. Industrial hemp has a THC content of between 0.05 and 1%. Marijuana has a THC content of 3% to 20%. To receive a standard psychoactive dose would require a person to power-smoke 10-12 hemp cigarettes over a very short period of time. The large volume, high temperature of vapor, gas and smoke would be difficult for a person to withstand, much less enjoy.
The US State Department must certify each year that a foreign nation is cooperating in the war on drugs. The European Union subsidizes its farmers to grow industrial hemp. Those nations are not on this list, because the US State Department distinguishes the difference between hemp and marijuana. Over 30 industrialized democracies do distinguish hemp from marijuana. International treaties regarding marijuana make an exception for hemp, and trade alliances such as NAFTA allow for the importation of hemp. In fact NAFTA allow for the importation of hemp. All members of the Group of Seven Industrialized Nations permit hemp cultivation except one-the United States.
RESIDENTIAL TENANCIES: Mental Health Problems, a Duty to Accommodate, and a Tenant’s Right to Remain in their Home
By: Michael K.E. Thiele, B.A., LL.B., Plant Quinn Thiele LLP, Ottawa, Ontario Canada. Copyright 2007
The legislation governing most residential landlord and tenant relationships in Ontario is the Residential Tenancies Act S.O. 2006, c.17. (RTA). While the residential lease, written, oral, or implied, executed by the parties may inform the rights and responsibilities between the parties, the lease agreement may only establish those rights subject to the over-riding provisions of the RTA. In Ontario, the RTA applies to rental units in residential complexes despite any other Act and despite any agreement or waiver to the contrary. Further, where a provision in a tenancy agreement/ lease is inconsistent with the RTA or its regulations, that provision is void, and where the provision of another Act conflicts with the RTA the RTA takes precedence. In this regard, the freedom to contract is restricted; even prevented by the RTA, and appellate judicial pronoucement confirms that the RTA is effectively a complete code removing even the jurisdiction of the Superior Court in dealing with the relationship between landlord and tenant outside of the regime established by the RTA.
A recognized and statutorily mandated exception to the foregoing is the application of the Ontario Human Rights Code, the provisions of which take precedence over the provisions of the RTA. It is with respect to this exception that this paper is concerned, in the context of discussing recurring and difficult cases arising at the Landlord and Tenant Board, and how the Human Rights Code is helping tenants suffering from disabilities that cause behaviours which otherwise or normally would justify termination of their tenancies and eviction.
In practice before the Landlord and Tenant Board of Ontario, it has become increasingly apparent that a great number of tenants who are called upon to defend themselves and consequently their tenancies are suffering from some form of mental illness. In many instances, the mental illness is undiagnosed, but nevertheless is apparent to the observant onlooker. These tenants, but for the litigation support offered through Legal Aid Ontario, Community Legal Clinics, and generous lawyers, are left without the protections that one expects a Court to afford parties under disability. The Landlord and Tenant Board will allow proceedings to continue against a tenant, who by any reasonable measure would appear to be a party under disability, with the usual caveat being that they speak to duty counsel (who can not represent during the proceeding) prior to hearing.
Whether justice is wrought in these circumstances is a hard question; however, I believe it is fair to say that under these circumstances, the chance for injustice is greatly elevated. How then, and where, is the protection for parties under disability, for the mentally ill and infirm?
The starting point to deal with mental illness in residential landlord and tenant matters lies in the Ontario Human Rights Code R.S.O. 1990, c. H 19.. The code provides that -every person has a right to equal treatment with respect to the occupancy of accommodation, without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, marital status, family status, disability or the receipt of public assistance-. A disability is defined to include a condition of mental impairment or a mental disorder.
In the recent Supreme Court of Canada decision in Werbeski v. Ontario (Director of Disability Support Program, Ministry of Community & Social Services), 2006 SCC 14 (S.C.C.) , the Court held that a provincially created statutory tribunal was obligated to follow the provincial human rights legislation when rendering its decision. The Court stated that statutory tribunals, which were empowered to decide questions of law, are presumed to look beyond the enabling statute, to apply the whole law to a matter properly before them.
The OHRC is a fundamental law. The Ontario legislature affirmed the primacy of the OHRC in the law itself, which is applicable both to private citizens and public bodies. Further, the adjudication of OHRC issues is no longer confined to the exclusive domain of the Ontario Human Rights Commission: OHRC, Section 34. The legislature has clearly contemplated that this fundamental law could be applied by the Court and other administrative bodies and has amended the OHRC accordingly.
In Werbeski , supra, the Supreme Court of Canada found that an administrative tribunal should apply the provisions of the OHRC when interpreting statutes because:
(i) The Ontario Human Rights Code states that it has primacy over other legislative enactments;
(ii) The recent amendments to the OHRC have removed the exclusive jurisdiction over interpretation and the application of the Code, from the Human Rights Commission.
In addition, the provisions of Section 11(2) and Section 17(2) and (3) of the OHRC specifically state that “a Court, as well as the Tribunal or the Commission, could apply these provisions of the OHRC when deciding if the needs of a person with a disability can be accommodated without undue hardship.” Section 47(2) of the OHRC states that the OHRC is paramount over other legislation. The Supreme Court of Canada has also held that the Human Rights Code takes precedence over agreements and contracts: Syndicat Northcrest c. Amselem, [2004] 2 S.C.R. 551 (S.C.C.).
APPLICATION TO LANDLORD AND TENANT BOARD PROCEEDINGS
The Divisional Court in Walmer Developments v. Wolch, on a appeal from a decision of the Ontario Rental Housing Tribunal (predecessor to the Landlord and Tenant Board), dealt with a situation where the tenant was diagnosed with schizophrenia. As a consequence of this condition, the tenant exhibited behaviours that included frequent screaming, throwing garbage loose in the halls, shouting profanity in the elevator, putting her property, such as her TV, out in the hall, and leaving food cooking on the stove unattended and hence filling the hall with smoke.
The Ontario Rental Housing Tribunal did not apply the Ontario Human Rights Code, and failed to give consideration to the implications of section 2 of the OHRC to the eviction proceedings before it. This was ultimately held to be in error as Section 17 of the Code provides:
17(1) A right of a person under this Act is not infringed for the reason only that the person is incapable of performing or fulfilling the essential duties or requirements attending the exercise of the right because of disability.
(2) The Commission, the board of inquiry or a court shall not find a person incapable unless it is satisfied that the needs of the person cannot be accommodated without undue hardship on the person responsible for accommodating those needs, considering the cost, outside sources of funding, if any, and health and safety requirements, if any.
After some discussion of issues pertaining to the Ontario Rental Housing Tribunal’s ability to require accommodation (since ameliorated by statutory amendments), the Court held that a tenant suffering a disability has the protections of the OHRC, and most importantly that the question of accommodation shall be considered in the Tribunal’s/Board’s determination of whether to relieve from eviction under the discretionary provisions of the Tenant Protection Act/Residential Tenancies Act.
In Walmer, the appeal was allowed because it was ultimately demonstrated that the landlord could accommodate the tenant by notifying the tenant’s family of problems as they arose and that the tenant’s family could intervene. It was found that the tenant, when on her medication was controlled and her behaviour was then not objectionable.
Walmer, then, stands for the proposition that a landlord has a duty to accommodate a tenant who exhibits behaviours as a result of a disability, that otherwise would warrant termination and eviction, and where the accommodation does not amount to undue hardship, to actually take steps to assist the tenant in maintaining their tenancy by finding reasonable solutions to the problems alleged. Further, where a landlord fails to provide such accommodation, the Landlord and Tenant Board is directed to consider what may be a reasonable accommodation and where available, refuse termination and eviction to the landlord.
SINCE WALMER The Walmer decision has had the practical impact of sensitizing the Landlord and Tenant Board to the fact that many of the persons who appear before the Board are suffering from disabilities. While sensitized to the issue, it continues to be the case that the burden of establishing the existence of the disability; and further establishing what the reasonable accommodation may be; remains with the tenant. Where tenants do not have representation and/or do not have a support network the accommodation potential (and hence retention of the rental unit) offered by Walmer , is not pursued and hence is lost. Very clearly, in the Landlord and Tenant Board context, a human right is only a right if it is pursued and the Board will not, on an institutional basis assure that a mentally ill party is represented and that his/her human rights are asserted.
The Walmer decision has had a dramatic real life impact for many tenants. In particular, tenants suffering from schizophrenia, paranoid delusional disorder, dementia, alzheimers, hoarding instincts, and a host of other mental illnesses that from time to time cause behaviours that otherwise would warrant termination and eviction; now, are retaining their housing, with the landlord being required to take a little extra care for them. The Walmer development has been a positive change in that it has very clearly prevented homelessness of persons with mental illness who are able to be treated and who will function normally with the right support, understanding, and accommodation.
This is significant as the number of aging renters increases. Aging seniors, who haven’t had an issue with their landlords since the commencement of their tenancy are increasingly finding themselves before the Landlord and Tenant Board facing allegations of anti-social behaviours. Often these behaviours are age related as aging sometimes brings on mental illnesses or medical conditions that cause a person to exhibit anti-social behaviours. Often, these can be medically treated or ameliorated by additional care and support. These -mentally ill- tenants are often just regular folks whose entire life is subject to being turned upside down through eviction because they got sick. Through eviction they lose the stability that having a place to live gives, it robs them of peace, their routines, and likely exacerbates any medical condition or mental illness through the stress caused by the eviction.
While Walmer has been a tremendous help to many tenants by forcing the Landlord and Tenant Board to recognize -disabilities- and to impose accommodation of those disabilities where reasonable; the procedures of the Landlord and Tenant Board in adjudicating cases dealing with the mentally ill continue to disregard the fact that in many instances these tenants are not only mentally ill but incompetent as well. From the perspective of the Landlord and Tenant Board it never has a party before it that can be a -person under disability- as in the sense of the Rules of Civil Procedure. Query whether this is just.
CONCLUSION The issue that this paper started with remains unresolved. Persons suffering with mental illness still face procedural disadvantage at the Landlord and Tenant Board. The Landlord and Tenant Board can make a person homeless. Hopefully, the law will eventually recognize that the mentally ill and incompetent deserve procedural protection and it seems fair to suggest that one avenue to such protection is through the ideas expressed by the Court in Walmer.
The Extraordinary Importance of Contract Law:
Contract law lies at the heart of our system of laws and serves as the foundation of our entire society. This is not an exaggeration. It is a simple observation – one that too often goes unobserved.
Our society depends upon free exchange in the marketplace at every level. Contract law makes this possible. Exchanges in the marketplace always depend upon voluntary agreements between individuals or other “legal persons”. Such voluntary agreements could never work without contract law.
Contract law serves to make these agreements “enforceable”, which usually means that it allows one party to a contract to obtain money damages from the other party upon showing that the latter stands in breach.
Without contract law, these voluntary agreements would instantly become impractical and unworkable. Since such agreements lie at the very heart of our society and economy, and since they depend upon contract law, it is no exaggeration to say, as I have just done, that “contract law lies at the heart of our system of laws and serves as the foundation of our entire society.” Those were the very words that I used to begin this essay.
Stated more precisely, it is our system of contract law that underpins and makes possible the many private, voluntary agreements by which exchanges of goods and services are accomplished in our society at every level. No exchange is exempt from the contract law, which indeed can be rightly called the cornerstone of marketplace civilization.
In this article, I will briefly explain the different types of contracts that can be made, paying special attention to the common problems that arise in their formulation. I will also discuss how contracts are enforced or avoided, and how a wronged party to a contract can obtain recompense and other relief from the wrongdoing party. I will explain the principle of good faith, which in California is known as the “covenant of good faith and fair dealing”, and which has been too often overlooked by commentators and practitioners alike.
I do not aim to provide a comprehensive explanation of all the theoretical and practical difficulties. This is an overview, not an exhaustive treatise. Sometimes the overview will better help the reader understand the essential points, or the “forest” if you will, while the treatise is better for explaining the many intricacies and complexities that can be rightly called the “trees” of contract law.
Definition of a Contract:
A contract is nothing other than a voluntary, private agreement to exchange valuable things. It most often is an exchange of valuable promises. For example, a home-buyer might promise to pay $250,000 to the seller, who in exchange promises to deliver unencumbered title to the buyer.
Good Faith and Fair Dealing:
Most exchanges are straightforward matters that are self-executing and done without any problem at all. When I buy a cup of coffee at my local cafe (which I have just done so that I may enjoy it while I compose the present essay on my laptop), the cafe and I have made a self-executing exchange, which we have done without a hitch.
Ditto, if I buy a book at the local bookstore or have my car washed at the local car-wash. Ditto again, if I purchase airplane tickets from a travel agent, or have my house painted, or have my teeth cleaned at the dentist’s office.
Fortunately, most exchanges are performed on the spot to everyone’s satisfaction. Were this otherwise, our society and general commerce would soon become choked by controversy and disputes. Thus it may be said that our system depends above all on the good faith and honesty of our people. Indeed, the principle of “good faith” is central to contract law.
Every contract made or performed in California is said to include an implied-in-law covenant of good faith and fair dealing, by which each party to the contract agrees to act in good faith and deal fairly with the other. This has been construed to mean that one party to a contract should not try in bad faith to cheat the other party of the benefit of the bargain made by the contract.
Inevitable Complications and Controversies:
While most exchanges are performed without incident, not all of them are, as we all know. This is true even in the simplest of matters (e.g., the sale of a cup of coffee) and is even more likely in a complicated transaction (e.g., the financing, delivery, and insurance of commercial aircraft for an overseas company over a thirty-year term).
Let us take a simple example first. I will list only a few of the problems that might arise from a simple contract for a one-time sale of a single box of tomatoes. If you offer to give me $10 for a carton of tomatoes that I have sitting on a table behind me, and if I agree to accept it as payment in full for the tomatoes, we have made an oral contract that we can perform on the spot: You hand me the $10 bill, and I give you the carton. Nothing more simple or straightforward, right? But what if you discover that my tomatoes were too ripe when you bought them, and that they all go rotten within two hours of the purchase? What if I take your $10 bill, but then refuse to give the box of tomatoes, telling you to “beat it, scram, or else you’ll get hurt!” What happens if your $10 bill turns out to be counterfeit, or if you take the tomatoes but refuse to pay, or pay with a check that you later cancel or that is returned unpaid by the bank? What if the carton breaks while you are carrying it, and all the tomatoes fall to the ground and are ruined? What if you needed these tomatoes for the dinner you meant to make for your boss, who, in disappointment, decides not to give you the promotion he had earlier discussed with you? My point is only that problems can and often do arise in even the simplest, easiest exchanges.
In more complicated transactions, the possible difficulties are varied and sometimes difficult for the parties even to envision at the outset, much less address in an intelligent, orderly manner. Let’s consider one such example. Suppose a large American company makes a contract with a large foreign company by which it becomes obliged to design, deliver, and insure an entire generation of commercial aircraft over a thirty-year period. The possible complications might take me literally years to ponder, list, analyze, and explain. It could take a decade or longer for feuding teams of lawyers in several countries to sort out the possible complications that might arise.
To avoid such controversy, which results in burdensome attorney’s fees and an equally burdensome devotion of attention and effort that could be better employed in more constructive endeavors, it is necessary to have a proper contract in place at the outset: If the exchange is to be done on the spot and simultaneously, a written contract need not be used, but the parties should either reasonably trust one another’s good faith or have an exact understanding of the exchange before they undertake it. If the exchange cannot be performed in full on the spot, there should be a written contract to state the parties’ obligations and the essential terms of the exchange. A good written contract will also address at least the most likely complications that might arise, assigning responsibility for any such complication to a specific party in a specified manner.
A good written contract is one that clearly describes the exchange to be done and also addresses the possible complications that might arise during the performance of the exchange.
Different Kinds of Contracts:
I earlier provided a simple definition of a contract. Here is a more technical definition: A contract is a private compact, voluntarily made, by which the parties agree to exchange valuable things with one another. A contract comes into existence when (1) one party makes an offer that the other party accepts, and (2) the parties thereby agree to exchange valuable benefits on specified terms and conditions, with reasonably specific agreement on the price, place, time, the goods or services to be delivered, and the other essential terms of the exchange.