Thursday, 26 February 2015

On the use and abuse of contracts

I've recently done a lot of work to provide service to a customer, whom, I found out at the last minute, was tied into a 2 year contract with a service provider, for a product wholly inadequate for what he got it for.

As a friend so eloquently put it:

On the surface a contract seems like a two way street:
  • I have something that you can have and here are my terms; and
  • You have something I want and if you give it to me here are my terms
However, upon closer inspection of most contracts are lopsided so it's rather a case of:
I have something that no one else has. You can have it if you play by my rules. Sorry you're desperate sign here.

Yes, we do have a "Consumer Protection Act" - but it really only protects the little guy and really small business - and only within bounds.

In terms of contracts generally the end-customer is at the end of a long chain of contracts. So if the end-user stops paying his contract, the 2nd tier ISP ends up with cash-flow problems honoring his contracts; who, if in turn stops paying their contract, will end up being legally bullied by the heavily financed 1st tier guys who supplied them, and so they will just pass on the legal bullying to their customers.

In fact, I think a lot of smaller guys learn their tricks the hard way, from the bigger guys.

But, it's an evil cycle that can only be broken in an ecosystem that doesn't rely on NDA's and big finance. Which is why I am such a proponent of "organic growth".

That said, one mistake that I've made in the past, was to assume that, just because I play fair and am reasonable, doesn't mean that I can expect anyone else to. I learnt this the hard way, and had to cough up lots of money for services I never received, to someone who deserves to rot in jail.

Another lesson that I think I am busy learning - but the verdict is still out: some things require big finance. A business that can take 10 years to build, can be built in a year with the right finance. The problem is that if it fails it causes a lot more destruction. If it succeeds, it can prevent a lot more disruption and it can prevent fragmentation of markets and the inefficiency that comes with that, by rather unifying them by creating much needed gravity around a certain thing.

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