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Contracts: are there no limits?

January 20, 2015

festival-583442_1280While many continue to question the value and relevance of contracts, there are indications that our world is becoming more driven by rules and litigation.

Society, ever less tolerant of ‘bad behavior’, seems to welcome regulation. Perhaps this is an inevitable consequence of the breakdown in trust, itself caused by the erosion of traditional loyalties and communities. So while regulation has influenced many aspects of human tolerance in a positive way, general levels of polite behavior often appear to have fallen.

What exactly are the standards when it comes to a 5-year-old’s birthday party? That is the question being put to the test in Cornwall, England, where no-showing for a party has resulted in an invoice and threats of court action to recover resulting costs. The offending child (or parents?) accepted the invitation and then had second thoughts. Their host incurred fees of approximately $25 which could have been avoided if there had been a cancellation.

Justified annoyance? Probably. Appropriate reaction? I suspect not. And indeed, not only is this attempt at recovery most likely doomed to failure (for background and expert opinion, click here), but the host parents would seem not to have undertaken effective stakeholder analysis when launching their attempted recovery. For example, what will other parents think? What will other children at their son’s school say? There is every chance that next year, the boy will celebrate his birthday alone. Play dates? Forget about those – they are too risky.

In the end, every smart individual (and organization) must weigh their desire for recovery (or revenge) against the wider impacts on their brand or reputation. That is why litigation is so rare. Most times, it is far smarter to simply write off the losses and forget about them, or to seek compensation through reasoned discussion.

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