Oral agreements are often a bad idea, get it in writing
- Published: Nov 27, 2014, 4 AM
This is my last regular monthly column for Coin World. I’ve enjoyed my 18 years as a columnist, and appreciated the many notes and emails from readers as well as the occasional greeting at a coin show. It’s good to know someone is reading what I write.
As I go, I’d like to leave behind a few of my most important bits of advice, which those of you who have read Coin World for long have seen repeated in my columns. Let’s call them the “Five Rules for Staying Out of Legal Trouble.”
Rule 1: Get it in writing. While it’s been good for my law practice, collectors and dealers making oral agreements is always a bad idea.
In some cases, because of laws known by their old English common law name of Statutes of Frauds, those contracts aren’t enforceable. Even if they are enforceable as a technical matter, without a writing of some kind the parties can argue over the terms of the agreement, or even if there was an agreement at all.
In this digital age, new laws allow emails and electronic signatures to substitute for old-fashioned face-to-face contracts, so there’s even less excuse for leaving it at a handshake or phone call.
Rule 2: Do your research first. Clients complain about buying overpriced coins, or selling too cheap, or doing business with a fly-by-night firm who can’t make good on his or her promises. With the wealth of information available to anyone via the internet, a few clicks can yield a great deal of information about the rarity or market value of coins, and the reputation and longevity of dealers. I tell investors in China and Europe about how transparent the rare coin market is in the United States and they can’t believe it. So nobody here should do deals ill-informed.
Rule 3: Settle disputes. At the risk of sounding preachy, compromise beats litigation any day. Again, I earn fees by representing dealers, collectors and investors in lawsuits, but after more than 30 years of doing that, the virtues of an early compromise seem greater and greater.
In nearly every case, the amounts spent by both sides on legal fees, or the opportunity costs of fighting for the last dollar rather than accepting 90 cents, or the negative publicity, just aren’t worth it. Some cases are impossible to settle, but most aren’t.
Rule 4: Use lawyers. Yes, we can be expensive, but as it’s my last column I’ll say it — lawyers are worth the money. Over the years, many of the cases I’ve handled would not have existed, or would have been a lot easier, had one or both parties used a lawyer in their initial transaction.
It’s an old adage that when a deal is done, nobody is thinking about disputes down the road. Lawyers do that. We think about what provisions are necessary, and how best to phrase those provisions so they accurately reflect the parties’ agreement — just in case. We also advise clients on the ramifications of doing business in certain ways to avoid legal or regulatory problems. Better safe than sorry.
Rule 5: Use your common sense. If something doesn’t feel right, don’t do it. I frequently have two-minute consultations with clients about a situation or a proposed course of action, and after I give them my opinion they say, “I knew you’d say that.” In most cases, I’m simply reflecting their own ethical response. Laws are tricky, and occasionally legislatures make irrational choices. But for the most part, what’s illegal is probably unethical as well, and all of us can reflect on our actions and determine whether or not to proceed.
I look forward to partnering with my friends at Coin World on special projects from time to time, but until then, I’ll see you at the coin show!
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