Why Most Business Contracts Are Worthless

Always do right. This will gratify some people and astonish the rest.
MARK TWAIN

For most of the time that I have been in business, I have done business—including some really large deals—without contracts. At various times I have tried contracts, or others have insisted upon them against my wishes.

I tried them in the karate business when I was selling licenses. I had what I thought was a simple yet complete five-page contract drawn up at great expense by a contract-law attorney. The majority of people signed it without any fuss, but about a dozen sent it to their attorneys. All of these came back with numerous paragraphs they wanted changed on the advice of counsel. But you know what’s really funny? None of the 15–20 paragraphs in question were the same.

After trying to appease a couple of potential licensees whose attorneys were doing nothing more than TRYING to justify their fees, I finally just said to sign it as is or don’t, I am not making any changes.

Eventually they all signed.

My web business took off no upfront fees or contracts, I began to use contracts as my product became more and more powerful it took far longer to set up, so I changed to contracts again. People signed them, dated them, faxed them back, and then completely ignored them five months later when a new manager showed up who demanded a cheaper solution.

In my experience it just doesn’t make a difference having or not having contracts, as the results are the same.

FACT: When someone wants to break a contract, they will lie, steal, cheat, dream up nonexistent problems, and blame you and your staff for every ill in their lives.

This person is not someone who will bring joy or prosperity to your life. Forget the indignity of it. Forget the lies. Forget the fact that you are 100% in the right and the contract breaker is wrong. It simply doesn’t matter. If you sue them, you MAY win. (The lawyers always win!) It will cost you a large amount of time, money, mental energy, and lost opportunity, and even if you win that’s just where the fun starts.

IF you win, you then have to collect. Ask the Brown family how much they ever got from multimillionaire and “presumed” double murder O.J. Simpson and you will begin to get an idea of what chance you have of ever seeing a penny from your judgment. Yes, you should have things spelled out in as much detail as possible to avoid confusion down the road. You can even go to the trouble and expense of having an attorney draft a solid letter of agreement so you both know what you should be doing, or just write something up yourself so it’s clear to both sides what the deal is. Just don’t expect it to mean much once a person has decided to no longer do business with you. If you have a good attorney—and I have had a few—they will give you exactly the same advice as above when it comes to pursuing contract settlements through the courts. People who want to screw you will try, and people who don’t won’t. A piece of paper, no matter how well written, won’t stop either party from acting the way they act.


Contracts kill more deals than they save; use them only when you have no choice.

Please consult your attorney before following this sage advice (LOL).

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