Plain English Project #3

"Make Me: You don’t have to do anything in America until a judge says so."

Welcome to the third edition of the Plain English Project. The last article on contract abilities and rights flows into the next topic: “Make Me: You don’t have to do anything in America until a judge says so.”

Do I Have To?

Small business owners dedicate a huge chunk of their brains to basic questions like, “Do I have to do what this person said?” and “Does that person have to do what I said?”

Most of the time, the simple answer is “no, not until there is a signed order from a judge that says they have to do it.” A signed order comes only through a lawsuit.¹

This reality crops up often in business dealings. Consider a few basic examples. (Keep in mind that in each example you could be on either end of the stick.)

Example One: The Underappreciated Minority Partner vs. The Bully Majority Partner

A minority partner demands to see business records that the majority partner controls access to. The majority partner doesn't have to share them until a judge says so. That is the case even if the partnership agreement says the majority partner must give him access. The minority partner has to file a lawsuit to force the majority partner to share the records.

Example Two: Karen vs. The Evil Corporation

A disgruntled customer calls and demands for an owner to answer questions about a product. The owner doesn’t have to speak to the customer or answer any of her questions, until a judge says so. The customer can get access to information through the process of discovery. Discovery only happens as part of a lawsuit. 

Example Three: The Customer Who Lost His Wallet vs. The Scrooge Vendor

A vendor sends a bill saying an owner needs to pay some amount. The owner doesn't really have to pay the bill until a judge orders it. It does not matter that the owner promised to pay the vendor in a contract. It’s the job of the vendor to force payment if the owner refuses. 

Even after the vendor wins a lawsuit against the owner, the owner can still resist. It’s the vendor’s job to take the judge’s order and collect the money. The collection process can involve multiple additional lawsuits. 

You can think of examples from your own business, and imagine even more hypotheticals. From a purely legal perspective, there are few consequences for inaction until a judge orders action.

“To Be or Not To Be (a Contract Breach)”

At the risk of confusing you, I’ll share a line I use to think about this point: “Nothing IS anything until a judge says so.” 

I think of it in this cryptic line because I often hear people spout conclusions that something another person did “is” fraud, or “is” a contract breach. They email me stacks of documents that prove their point. They want me to say they are correct and tell them how I can swiftly make them whole. I can agree with them all day long, but it’s just one more opinion that they can’t easily translate into action. Only a judge’s opinion matters.

Takeaways

The biggest takeaway is that it is difficult in America to force someone to do something that they don’t want to do, with or without a contract. Business owners that understand this have an advantage over those that don’t. 

Smart owners know when they have an uphill battle, and they know when the other person is in a weaker position. Smart owners assess their options with a level head and make the best choice available. They might pay a good lawyer to advise them, but they don’t waste precious capital on law office therapy sessions. They either sue, negotiate some compromise, or find an alternative way to reach their goal. 

You might wonder, if all this is true, why does anyone do anything at all? Business people still honor obligations primarily to foster relationships. Some act to avoid getting sued, but more often they want to keep their vendors, customers, landlords, lenders and partners happy. 

Upcoming Topics

Thank you for reading. For the next article, I’m thinking to tell a true cautionary tale that reiterates the points from the last two articles. Then I’m going to explain the difference between negotiations and disputes, and the types of lawyers that are best suited for each task.

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Acknowledgments: Thanks to Mike Woitach for editing.

1. Two important clarifications to knock out early: (1) As with all general rules there are some exceptions. I will cover exceptions in future articles. (2) You might wonder why I don’t mention a jury. Whether it is a jury trial or bench trial, the final decision is reduced to an “order” or “judgment,” which is the document a judge signs when the trial is complete.