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In business, even the idea that things will stay the same is just an assumption: present trends will continue only until they do not. Challenging your assumptions is vital, but there is not enough time in the world to challenge EVERY assumption. So when (and how) do you challenge assumptions?

Ask why, and then ask the why behind the why.

I have done a video about this, with insights from the theory of constraints and the 80/20 (Pareto) Principle:

The Klondike Gold Rush, fondly remembered in Edmonton every Klondike Days, shows us two paths to wealth. The obvious one – dig for gold. Also a less obvious one, which I explain in video 4 of my business strategy series:

Sooner or later your distributor will have a change of management, and the new management could ruin the business. This is a problem not just for the distributor but also for the manufacturer. In my latest business strategy video – number three in the series – I discuss the problem and some contractual terms that can help:

Here is the second in my new video series on business strategy issues. This video features the Theory of Constraints and also refers to the 80/20 Principle (Pareto Principle):

In business we assume that clients are more or less equal, resources are more or less equal, and products and services are more or less equal. Wrong. Embrace the business power of INEQUALITY!

Here is an introduction to the 80/20 (Pareto) Principle. I include an explanation of independent variables (what 80/20 deals with) versus dependent variables (what the theory of constraints deals with):

 

 

Brass Knuckles – The Next Thing In Customer Care?

You probably know what United Airlines did to their passenger Dr. David Dao.  If not, this clip from Jimmy Kimmel gives a good orientation: https://youtu.be/HV28_ENzFog

Why are so many people – including me – so upset about this? United did not kill Dr. Dao, or try to kill him. No doubt they would have preferred for him to leave without any violence at all, though they did resort to violence when it seemed convenient.

But after several days I still feel horror, disgust, and outrage. Why?

Because the normal reaction to evil is horror, disgust, and outrage.

I use the word “evil” deliberately and literally. This is not an exaggeration.

What is evil? According to Terry Pratchett’s character Granny Weatherwax in the novel Carpe Jugulum:

Evil is when you treat people as things

The motive does not have to be cruelty, or even dishonesty. United was evil even if they had the right to remove Dr. Dao – which by the way I very much doubt. Treating people as things is evil whatever the motive.

Here are some of the ways that United Airlines was evil:

  1. United showed no concern for Dr. Dao’s reason for needing to take the flight, namely that he had patients to see the next morning;
  2. United did not seek to find a replacement to exit the flight, for example by raising the compensation offer to a high enough level;
  3. United invited thugs onto the airplane to remove Dr. Dao by threatening violence and, if that did not work, by applying violence;
  4. Thugs acting as agents for United violently removed Dr. Dao. I find it hard to believe that three large men could not have removed one small 69-year-old without reportedly inflicting a concussion, breaking his nose, and knocking out two of his teeth. But whether or not they wanted to injure him their violence was, under the circumstances, evil;
  5. Dragging Dr. Dao was also evil. The thugs, having injured him, should have left him where he was and instantly sought medical help. Even if they thought he was dead, they should have shown his body more respect;
  6. The first “apology” was grotesque. United CEO Oscar Munoz on April 10, 2017 apologized for “having to re-accommodate these passengers”. Dr. Dao was not just someone inconvenienced by having to take a later flight – we have heard that United inflicted a concussion, broke his nose, and knocked out two of his teeth. Or should I say they re-accommodated his teeth?;
  7. Then, in a memo to employees, Munoz claimed that Dr. Dao was “disruptive and belligerent”. If true, that could have justified his removal. But a video I have seen shows Dr. Dao being firm but calm. If the video is reasonably complete then Munoz was misinformed or deliberately lied about Dr. Dao. I do not know American law, but in Canadian law this looks like defamation. Defaming your victim is also evil.

It seems from this incident and others that United’s attitude towards passengers ranges from indifference to hostility. One can pray for United to go bankrupt. Until and unless it does, I question whether United should be allowed to fly in Canada.

 

As of the start of 2017 my law office is at 1 King Street West, Suite 4800, Toronto, M5H 1A1. All of my other contact information stays the same.

In honour of the launch of my new website at www.Franklaw.ca, please enjoy this picture of a space shuttle launch:

Launch_shuttle_Atlantis

It’s still a bit rough but I have started my own little YouTube channel at: Albert Frank’s channel.

Here are some of the commonest parts of a contract that you need to know about, for contracts in the common law jurisdictions, such as most of Canada, the United States, and Great Britain.

Parties

It takes at least two parties to make a contract. Who the parties really are is vitally important but not always obvious.

Suppose you negotiated with good old Joe of Joe’s Fish & Bait Limited, and Joe signs for the corporation. The corporation would be bound by the contract but, unless there was a special clause in the contract saying so, or other special circumstances, good old Joe himself would not be bound.

So Joe usually would not be liable if the corporation breaches the contract, even if it was Joe himself who decided that it would breach the contract.

Even sophisticated businesses with millions of dollars at stake can make this mistake. Consider the great salad oil scandal of decades ago. A crooked businessman, Anthony “Tino” De Angelis, borrowed millions based on American Express warehouse receipts verifying that he had a sea of salad oil. He actually had nowhere near as much salad oil as the warehouse receipts said. The lending kept going for years despite warning signs, including tip-off warnings about the fraud, because the lenders trusted American Express.

When the fraud finally came to an end American Express pointed out that the receipts came from a subsidiary, not from the main American Express company. This let American Express negotiate a payment to the defrauded lenders that was a fraction of what it would otherwise have had to pay.

Consideration

This can be complex. The key point is that for a binding contract all sides have to give something of value. Value can take many forms, such as money, real estate, binding promises to do things…

Some lawyers would disagree but in my opinion it is useless to write into the contract “magic words” like “payment of $1 and other good and valuable consideration”. Was the $1 really paid, and can you prove it? What is the “other good and valuable consideration”? The wording is not harmful but it might well not save the contract if it is unclear what the real consideration is.

Decades ago I represented a buyer. He bought out the other shareholder in a corporation by assuming the debts and handing over a miniscule cash payment, in coins. I actually photocopied those coins to help me prove, if it ever became an issue, that my client had really paid.

Term & Renewal

Some contracts cover only a specific event, like a simple sale of property, but others cover a lengthy period, a “term”.

Understand what the term is, because it can make the difference between a good deal and a disaster. A restaurant with only two years left in the term of its lease would be much less valuable than one with 4 years left to go plus the option to renew for up to two five-year terms.

Written?

Not all contracts have to be in writing, but having it written certainly helps if you need to prove exactly what the deal was.

Some contracts must be in writing. For example Ontario’s Statute of Frauds, and similar laws in other places, require that a contact to sell land, or a lease, needs to be in writing.

Is the FULL deal written?

A partly written contract can be even more dangerous than a completely unwritten one. If what the other side gets is written out in full detail some of what you are supposed to get is left out of the written contract, you are in trouble.

Arbitration clause

If the contract has an arbitration clause then some or all disputes related to the contract might have to be dealt with by an arbitration and not by a judge in the regular courts.

Governing Law & Jurisdiction

If all the parties to a contract are in one place, and the contract itself is to be carried out in the same place, you probably don’t need such clauses.

But it is not always that simple, so clauses can set out what kind of law applies, or what courts will handle any problems coming from the contract.

So the contract could theoretically have a clause saying problems arising from the contract are to be handled by the courts of Albania (jurisdiction) applying the law of Italy (governing law). More often the jurisdiction clause and the governing law clause will point to the same place, such as the courts of California applying the law of California.

Force Majeure

Force majeure clauses set out what circumstances beyond the control of a party would suspend or end that party’s obligation to fulfil the contract. In those contracts containing them, the clauses might for example cover one or more of war, expropriation, crime, and natural disaster.

Conclusion

You must understand that I have listed only some of the contract clauses you might need to pay attention to. Also, you might have a special situation that is an exception to the above general comments.

If you would like to talk with me about contracts or other business law issues, or could use some legal help, you can contact me by phone at 416 929 7202 or by e-mail at afrank@FrankLaw.ca.


Also, you can get a copy of the above article in .pdf format, suitable for sharing with your contacts electronically or by a paper printout, by e-mailing a request to me at afrank@FrankLaw.ca