Unboxing Business Law: 3 Ways to Use Your Business Documents the “Write” Way

We lawyers see it all the time, often with the benefit of hindsight. And by the time a lawsuit is filed against a business client, it’s usually too late. The business’s communications, standards and protocols, or other writings show a clear lack of attention to, and appreciation for, the importance of its writings/documents. This lack of care can ultimately lead to unforeseen and harmful legal claims against the business. But the risk of legal claims can be reduced by keeping a few important concepts relating to business writings in mind. This article discusses how to use business documents the “write” way.

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1. Silence Is Not Golden

“Silence is golden” expresses the idea that silence is a good thing. This was probably coined by someone with small children. Indeed, sometimes silence can be great for you and/or those you around you. But in business, silence can be deadly!

a. A. Hoal Revisited

Recall the following scenario, discussed in our previous article about The Art Of Not Being A Jerk. Better Business Practices, Inc. (“BBP”), an electronics goods distributor, enters into an agreement to ship products to another business, called None of Your Business, Inc. (“NYB”). Adam Hoal (“A. Hoal”) is in charge of BBP shipping. At some point, NYB sues BBP, claiming that a number of shipments were not delivered as agreed, including late shipments and orders that did not include the correct number of units. Following initiation of the lawsuit, NYB’s lawyer starts the formal process of demanding sources of evidence from BBP, called the “discovery” process. NYB demands all emails relating to the BBP - NYB agreement.

b. “Objection Your Honor, Hearsay!” “Not So Fast, Counsel …”

Imagine that, prior to the lawsuit, NYB emails A. Hoal and asks why a particular shipment is 10 days past due and why the prior shipment did not have the agreed upon number of units. If A. Hoal chooses not to reply to NYB’s email inquiries, this could be interpreted by a California state judge to be an “adoptive admission” and the email would be admitted into evidence. This is because, while out-of-court statements used to prove the truth of the matter stated are generally not admissible into evidence due to the hearsay exclusion, admissions (a party’s statements that go against its interest) are not considered hearsay.

As a result, the jury may consider this unanswered email as evidence as an adoptive admission by BBP, by determining that BBP received this email (via A. Hoal), that BBP would normally be expected to deny the statement, but BBP did not do so. Using this logic, the jury could ultimately decide that, yes, the shipment was in fact 10 days past due and the prior shipment did not have the agreed upon number of units. The jury would hit BPP with damages as a result. There you have it – silence is not always golden.

2. Writings Can Be Your Best Friend Or Your Worst Enemy

This underscores all points in this article. Writings (especially contemporaneous writings, made during or near the time of the act reflected in/by the writing) are incredibly important in the field of law, in part because they are often viewed as better evidence than oral statements that contradict such writings. Written evidence can be used in a number of ways, including to determine what parties to a lawsuit intended, or actually did, at or near the time the writing was created.

For example, if A. Hoal testifies that on a certain date he personally confirmed the disputed shipment was sent out for shipping to NYB on the agreed upon date, but the written shipping records show that the shipment went out 10 days later, which story is the jury more likely to believe? Most likely, the jury will determine that the shipment was sent 10 days late. Why? Because the jury is likely to give more weight to the written shipping records than to A. Hoal’s conflicting statements. The jury will view A. Hoal’s oral version of events as being biased, in favor of his employer, BBP, and not believable. On the other hand, the written shipping records will likely be viewed as objective, unbiased, and contemporaneous records of what actually happened.

Bottom line: make writings your best friend. Document important events at or near the time of the event to protect yourself. Besides being a good practice, you are creating a record that will help you in the case of a future dispute.

3. Using (The Right) Standards For Your Business

a. Know Thy Standards

Know what standards apply to every aspect of your business. Do you have employees? What are California’s policies for employee rest and meal breaks (Hint: see the California Labor Code)? Or are there specific safety standards required by law for your industry? Your standards or policies should be those applicable to your business and industry, and where appropriate, adapted to your needs. They should not be taken from cookie-cutter resources, including many online websites offering general law-related services. Why? Because, depending on your industry, you may have industry-specific standards mandated by law. And not having the right standards in place is never an excuse that will help you.

Let’s go back to the A. Hoal example above. Imagine that a BBP manager is called to testify at trial and asked by opposing counsel what BBP’s protocol is for ensuring that shipments go out in a timely manner. The BBP manager states that “We don’t have a process, per se. We’re a small company with limited bandwidth. But we always do our best to ensure that shipment do go out on time.” How do you think the jury will view this? They will ultimately conclude that BBP should have a written protocol in place to ensure timely shipments. They will think that not having actual, written standards is no excuse. They may conclude that BBP does not have a protocol in place at all!

b. Follow Thy Standards

Now, once you actually do have written standards in place, whether in internal documents, through contract, through adoption, or by law, you need to follow these standards. This is a common mistake made by businesses of all shapes and sizes. If you agreed you would set, coordinate, and lead periodic review meetings with your client based on an agreed schedule, you need to do it, or at least know and follow the procedure for making changes to the process if necessary. If you don’t, it could act as a legal basis for a lawsuit against you, such as claims of breach of contract and negligence.

c. Know Thy Limits

Also, don’t set unrealistic or impractical standards. Be honest about the standards you are agreeing to comply with. Sure, it is nice to aspire to high standards. Many aspire to do great things. You may also think that you are impressing your clients by agreeing to high standards. But you may just be setting yourself up for failure before you’ve even begun the work!

Instead, you should be honest in determining whether you have the sufficient knowledge, expertise, and resources to meet the standards you are agreeing to. You also need to continually review these standards to ensure that they are actually being met, and if not, change them as appropriate. This is a common pitfall for businesses – setting the bar higher than you can reach. But the consequence of doing this is not always limited to a breakdown in trust between you and your client. Rather, it can ultimately lead to a claim against you and a hammer blow to your bottom line.

4. Takeaways

Don’t forget these pointers the next time you put pen to paper. Remember, silence may be golden for people with young children, but it is not for your business. Make your business writings your best friend, not your worst enemy. And know your standards, keep them practical when appropriate, and follow them. To that end, you may also want to consult a lawyer who can help advise on making sure you are using and effectively implementing current, up-to-date standards for your business and industry. If you need help or have questions regarding which standards are right for you, please contact us at Law Unboxed.

Disclaimer: This article may constitute attorney advertising and is provided for informational purposes only. This article does not constitute legal advice nor does it form an attorney-client relationship. Specifically, this article does not address all potential situations and is in no way intended to apply to your particular situation. Qualified counsel in your jurisdiction should be consulted for your specific concerns and/or needs. If you want more information, please contact Law Unboxed with any questions!