What Are You Buying?
Updated: May 17
If I told you I would sell you all the cars I own for $5,000 would you do the deal without any further information?
Or would you want to know how many cars I owned? Their make, model, and year? Their color? The mileage of each car? Their condition? Their maintenance history?
You should want the same degree of specificity when you are buying a business or entering into a contract to buy goods or services. Many times, however, details are overlooked because they seem "obvious" to everyone (one of my favorite lines: "we all know what we mean") or the contract provisions seem mundane or unimportant.
If your purchase agreement says that you are buying all of the assets used in the seller's business, that's not enough. You need more specifics. You need a list of those assets attached to the agreement. You need to know their condition. You need to know if there are any liens on the assets. Otherwise, how do you know you are getting what you bargained for?
If your contract with a consultant says you are buying IT consulting services, that's not enough. You need details about what the consultant will do, what deliverables he or she will produce, who will own the work product, and the timeline for performance and delivery (not to mention how the fees will be calculated, billed, and paid). Otherwise, you give the consultant too much room to under-perform.
Lack of specificity decreases your ability to enforce the contract and increases the other party's opportunity to under-perform or not perform. Why would you take that risk when some attention to detail to the basic terms of the agreement during negotiations could decrease or eliminate it?