What your mom taught you about telling the truth is still good advice. While it may seem to go without saying, at least one judge has reaffirmed your mother’s rule: “it’s not okay to lie,” even if your contract says you don’t have to tell the truth. In Abry Partners V, L.P. v. F&W Acquisition, LLC, the court had to decide whether a very explicit disclaimer of all warranties and representations would be enforced to limit the liability of a company that had knowingly made false representations to induce the sale of the business to another company.
On its face, the disclaimer was very clear – the company that made the false representations had no contractual duty to tell the truth to the acquiring company, and any liability for false statements was limited to a predetermined amount. While the exact wording of the disclaimer may be too long to repeat here, it might as well have said: “Company A may make any false statement or misrepresentation to Company B to induce the sale, and Company B’s only legal remedy shall be capped at XYZ dollars.” This kind of disclaimer was written in two different sections of the sales contract.
Yet writing something in a contract doesn’t necessarily make it so. Judges have broad discretion regarding the enforcement of contract terms. Even though both Company A and Company B were sophisticated businesses with teams of legal professionals to advise this multi-million dollar transaction, the judge in this case held that it would be against public policy to enforce the disclaimer and to protect the company that made false representations.
What’s the moral of this story? Honesty isn’t just the best policy – it’s the law of the land, and no wording in a contract will change that. Further, as a general rule, you can’t rely solely upon the wording of a contract to forecast the outcome of potential legal disputes. Ultimately, courts strive to preserve justice, and a judge may easily override overbearing or unfair contracts.
Making more and more money in your business is what financial success is all about. That’s not greed. That’s just the reality of business. You have to be constantly focused on improving profitability, improving cash flow, and increasing the value of your business.
As leaders of small to mid-size businesses, we are wise to focus our energies on our daily operations and what we ‘do best.’ But from time-to-time we may be faced with a situation or need that is outside the scope of our own expertise. Common wisdom suggests that when this happens we should not waste our valuable time researching a highly specialized area that we may need to address only once. Instead, consider bringing in someone who specializes in the particular area of need--a consultant.
During a conversation over lunch recently, I was asked to comment on the five things that every business owner needs to know every day. This was in response to my statement that far too many business owners limit themselves to checking their bank balance each morning (without any apparent regard for any un-cleared checks or unrecorded deposits).
Learn how others do it. Download our guide to growth.
I was out sailing on my boat last week and I start to think about how running a small business is really like a sailing trip. Your business journey isn't over water but over time. Time is your ocean and your business is the boat. You depend on it to keep you safe during the journey and successfully deliver you to your final port of call.
Business owners solve problems every day—changing a strategy, deciding how to enter a new market, and fixing problems with the launch of a new product. Some of these problems are created by our industry, or competition, or our processes. Some just “happen.” And others – well, if we’re honest, we’ll admit we’ve caused a few of them ourselves.
There was a time in banking when a business customer could walk into his banker’s office and simply say he needed a loan to purchase a new piece of equipment. For most borrowers, those days are gone. Certainly once a business has an established relationship with their bank it is much easier, but some documents are still going to have to be filled out or updated.
Frequently my clients and prospects ask me this question as they don’t fully understand SaaS or how it can fit their business needs. Let’s first start with the question what constitutes Software as a Service. Instead of investing significant funds in software, hardware and the installation of the software on the new hardware, an organization can enter into a contract with a service provider and typically pay a modest fee per user per month for the usage of the software solution which you will access over the internet. The service provider will maintain the system and keep in up and running so you will not need your own IT staff to maintain this system. The SaaS movement started initially in the Customer Relationship Management space with SalesForce.com but in recent years other vendors have joined. Besides CRM solutions you can now also get your email system, document management, phone system, accounting, ERP and various other systems delivered in the SaaS model.