When Contracts Aren't Enough

Reading a contract is an important task in the life of a businessperson. You agree to terms and conditions that govern how you will do business and that could come back to bite you in the posterior. But when dealing with someone new, there's an even more fundamental - checking someone's reputation.

Alex Beam in the Boston Globe wrote a column about a ghost writing firm - New York-based Penn Group - that has sued a couple of its writers, allegedly because the young owners got made at the authors. The column may be accurate, or not, and I have no idea who ultimately holds the blame for the dust-up. But I do know one thing - that type of story is enough on its own for me to shy away from doing business with a company.

No matter how beneficial a contract's terms seem to be, you should have the basic sense that you can more-or-less trust the people on the other side of the table. If you can't, it won't matter what the contract says, because someone somewhere will be ringing a lawyer.

Before considering a contract, do some some background research and check a client's reputation. If there are some red flags, then you have a chance to steer clear. It might be that a company like Penn Group actually would be good to work with. Perhaps the writers really are at fault. After all, one of the writers at least had done more than one project with the company. But we're not talking about proving something for court. Instead, you want to limit unnecessary risk when it is tied with catastrophic results. Otherwise you might find that you were playing the business version of Russian roulette.