Law Concepts

by Colin Berkshire

I have been ranting a bit about how you need to go to a semester or two of law school, no matter who you are or what profession you are in. If you think that because you just sell phones you don’t need law school then you will at some point in your career pay dearly for that misconception.

Here are some simple concepts you need to understand:

  • Merchantability and Fitness for Purpose: If you sell something, and you took any effort at all to help or advise the customer on which product might be best for them, then the customer has the absolute right to cancel the sale and force you to take your service back. By default, you grant a warranty of Merchantability and Fitness for Purpose to every customer on every sale. And, despite the fact that your written contract disclaims such a warranty, you probably can’t get out of it. A disclaimer must be in all bold text, in all capital letters, and must include certain language. Even then, probably, you can’t get out of this one. This is called an “implied warranty.”
  • Waiver: This one is a real gotcha. Let’s say you leased some equipment to a customer. The customer calls you up and tells you they are having a tough month and they would like to skip a payment. They are a good customer and you agree to waive the payment due date. Surprise! More likely than not you have now waived the due dates on each and every subsequent payment. The customer no longer is bound to any payment schedule because you have waived that provision of the contract. Really. We lost a case on this one. Make certain that every contract you write has a “no waiver” provision.
  • Written Amendments: You have a written sales agreement with your customer. Everybody is in agreement. And, because you want to make certain that some fast talking sales person doesn’t modify the contract on the sly, you have the usual provision that the contract can only be amended in writing. Whew! You can’t just say something casual and find you amended the contract. (Being an officer of your company, your word is a legal representation by the company.) Sometime later you are emailing with a customer and you agree to something. Perhaps it is a special exemption. Perhaps it is permission to do something reasonable. Whatever. But because emails are in writing, and because you are a speaking agent for your company, you have just amended your contract in writing. Every time you send an email you are risking that being a written amendment to any of your contracts.
  • Signed Amendments: To prevent inadvertent written amendments to contracts from casual emails your lawyer recommends that you add a provision to your already very long contract that all amendments must be signed by an officer of your company. Well, sorry to break the news, but in many states your signature at the bottom of an email constitutes a signature. You have signed the email and the email is in writing, so you have just amended the contract, inadvertently. Our contracts state that amendments can only be made when hand signed by an officer, in longhand, in blue ink. Yes, we have that in our contracts.

Now, have I sold you on taking some law classes?