Posted: Monday, 2 July 2012 @ 11:33
One thing that struck me about the recent news story when the Prime Minister, David Cameron, said that comedian, Jimmy Carr, was “morally wrong” in trying to reduce his tax bill legally was the fact that he had to resort to a plea for morality.
As a commercial dispute lawyer, I often come across parties who state that they have a “moral right” to redress. Like all lawyers, I know that a call to morals in a business dispute context is an admission of failure. The subtext I hear is, “I know I’ve got no legal case but I believe I should get what I want anyway.”
When people use the ‘moral’ word in a legal situation, it’s usually because, when they negotiated a project, they failed to agree and put in writing what should happen if things go wrong.
And the law of averages states that things will go wrong and that the more successful you are (in that the more projects you have on the go), the more things will go wrong.
I think the problem principally arises as the ‘selling mindset’ is different from the ‘legal mindset’. The sales team want to close the deal as quickly as possible and that’s often more important than getting all the fine details sorted out first. They fear that negotiations on these points will delay the contract being finalised or even that the contract might fall through if what they want is proves to be too controversial.
This way of thinking is nearly always wrong. Large firms either solve this problem by having lengthy terms and conditions (for similar repeat projects) or have their own separate commercial team to agree the fine details of contracts and tie up the loose ends.
The commercial team know what they’re doing and act quickly. They know that the best time to agree the small print is just before the deal is closed, as that’s when the party you’re negotiating with also has the strongest need to close the deal.
In SMEs that don’t have their own commercial team, either the sales team must learn to negotiate on all the finer points of a contract and get them in writing before closing the deal, or the commercial role can be outsourced. That’s what commercial contracts lawyers do.
A commercial contracts lawyer will advise on what can go wrong with a particular project and make sure that the small print, or lack of it, does not leave you high and dry with no recourse to legal remedies if things go wrong.
Otherwise, you might just find yourself having to argue that the other party is morally wrong and face the (usually expensive) consequences of resolving the problem.
And, as for David Cameron, I would rather his government spent time on closing the legal tax loopholes than claiming the moral high ground. Although Jimmy Carr succumbed to such pressure (and it could well have been the end of his career if he did not), I doubt that many top corporate executives would do the same.
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Blog by Gary Cousins
Gary has been providing legal advice to shareholders, directors and business owners for over 25 years. Specialising in dispute resolution Gary is based in Birmingham with clients throughout the UK and overseas. View profile
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