Saturday, July 15, 2006

Agreements, more

So what kind of agreements can be short and sweet? One big and puzzling category, where time and again I've seen an inordinate amount of attention devoted, is that of agreements that can be terminated by either party at any time on 30 days notice. It's a safe bet these agreements could be shorter; after all, you can't build much else in a business around an ongoing agreement that either party can terminate quickly, so damages for breach are likely to be limited.

Every state has a body of commercial law governing contracts that will apply even with the most minimal of terms. Warranties, implied covenants, etc - for the most part all commonsense principles that we all assume when we enter into deals. At its most basic, a written contract really only need contain those specific and idiosyncratic terms that are important to the parties. That will always include price, term and when certain key events need to take place; it will usually also include a few other matters unique to the circumstances. After that, everything else is just risk shifting.

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