Why I Sign Contracts (Mostly) Without Reading
Hint: They Won't Protect You As Much as You Think
🧠 My Contract Philosophy
A lot of people won't agree with me on this, but contracts don't matter as much as you think.
Contracts enshrine the spirit of a business agreement based on mutual trust
If someone wants to screw you they'll either find a loophole or they'll simply break the contract
Then you are stuck suing them which means you are already losing money
Even if you win, there aren't great mechanisms forcing payment
Now the more important the deal, the more closely I read a contract (or get a lawyer / partner I trust to read). But if you want to slip into the legalese the fact that I'm signing away my soul, you'll probably get it done.
(And by the way, who decided to make legalese harder to read than Chinese?)
📚 Some War Stories
I have lots of examples over the years where contracts just went out the window:
When we sold Gravity, we had a contract to get paid out over 3 years. After the first 2 years the buyer just basically decided they didn't want to pay us the rest. We knew we should have had the money in escrow (this is why escrow exists) but at the time of the sale they didn't have the cash so we rolled the dice and lost.
Another Gravity example is we agreed to pay the consultant who helped us with the idea & launch a percentage of profits. We made a mistake in the writing of the contract and wrote percentage of revenue. It caused some drama but everyone understood the spirit of what we agreed on and we resolved the issue.
I'll write a separate blog post on this, but sometimes a founder walks away from a company with "too many" vested shares and even though he or she owns them contractually, it makes sense to give some back to those who will continue the work.
Honestly, I could go on and on but most of the examples are even more negative and I like to leave the past in the past.
✍️ The Moral
Do deals with people that you trust & respect.
Understand the deal points and the spirit of the agreement. This is what is important.
Sure read the fine print if you want, or have someone read it for you, but the fine print isn't going to save you if and when conflict arises.