22 Apr Enforcing Contract Terms: Would you Go the Distance?
One of the things I often preach about when it comes to contracts is do not put any kind of phrase or clause that you are not prepared to enforce 100%.
I bring this up because I had an opportunity to meet a business owner who is growing significantly, and as a result he often must deal with people that are not totally within his control. The consequence of that is that he, like most business owners, relies upon a contract to enforce the rules that he wants to put down for this business.
This particular contract came with a lot clauses. It is a long, lengthy contract. It reminded me of the fact that if you are going to write a provision in the contract, you must be prepared to enforce it. You don’t have to be the one to personally enforce it. That is why folks hire lawyers. Some people hire lawyers to act as the bad cop in the good cop-bad cop situation. Quite frankly, we lawyers are pretty good at it. But, whenever you have a provision and there is a blatant violation of that provision or a blanket rejection of the contract’s terms, it does no good to allow such wrongful behavior to continue. If you allow it to continue you run into something called the course of performance.
The course of performance is a mechanism that courts use to see if the parties have somehow arrived at a modification of the agreement. You must be very careful when you create contracts that you do not allow for modification through course of performance. For example, let’s say you include in the contract that the other party will provide you information on a monthly basis. Perhaps they fail to do it for one, two, six, or nine months. From that behavior, a court can infer that you are ok with it, that you waived that performance because it doesn’t matter to you. Due to your course of action, you may have modified the contract in such a way that it is hard to go back.
When you are dealing with a contract and terms that may be punitive or corrective in nature, you need to be prepared as the contract drafter to enforce the terms of that contract — all the terms of that contract. If you are not going to, then the question becomes why include it in the contract at all. There is no point to have a clause that you won’t enforce.
When you sit down to draft contracts, think about what you would want to have fixed if something goes wrong and whether or not you are prepared to void the entire contract or to sue on a particular failure of a clause. Are you prepared to go the distance to enforce the terms of a contract? I’m not saying that you will have to go the distance or that every violation of a contract needs to be met with a lawsuit — that is far from what I am saying. But, if it is significant enough to include in the contract, it should be significant enough to at least consider how far you are going to go to enforce that term.
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