Tuesday, February 23, 2010

Why didn't they just write it down?

Ken Adams exerpts an article by Sathnam Sanghera in the Times Online:
On the one hand, written agreements protect parties if things go wrong and provide a useful framework for engagement. But, on the other, drafting contracts slows business down—something Stephen Covey emphasises in The Speed of Trust: The One Thing that Changes Everything, with the words: “When trust goes down, speed goes down and cost goes up”. It also creates work for lawyers—in itself something worth avoiding—promotes bureaucracy and undermines trust by discouraging spontaneous displays of goodwill.
This last point is something that a decade-long study of outsourcing contracts by Warwick Business School demonstrated when it found that deals conducted on the basis of trust, instead of precisely worded agreements, could lead to benefits for both parties to the tune of as much as an additional 40 per cent of the total value of a contract.

1 comment:

  1. Trust...such a funny word.

    For anyone who has seen "Jerry McGuire" and the whole "my word is as solid as oak" gesture of trust...maybe that 40% expense is worth the piece of mind.

    Trust is not the same as it was 20 years ago. Now stores don't take paper checks or put things on your weekly "tab" to be paid later.

    So how do you raise the "trust factor" among the population? The UCC was a good start (filling in some gaps), but I am not sure what else you can do, since writing is much more exact and efficient than the spoken word or an implicit contract.

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