The New Year is here and many people are making resolutions for their lives and businesses. Whatever your focus is, personal development or business growth, I urge everyone to put on their list, if it is not already there, that they will form the habit of leaving a paper trail in their transactions.
We enter into various agreements every day – some small, some involving large sums of money, all a foundation for potential dispute. Many people enter into agreements without any written document and often there is no reason to regret that decision. But sometimes, disputes arise and the absence of a paper trail makes the resolution of the dispute difficult for the arbiter.
Not every documentation of an agreement needs the services of a lawyer. The information written on a receipt or invoice may suffice in some situations. For instance, an agreement between a person and a service provider. When paying for a service, a little note on the cheque or on a separate sheet of paper detailing the expectations of both parties will be enough to clarify the position of the parties should there be a dispute. For example, in an agreement for construction of bookshelves:
I, Mr Carpenter, received from Mr X, the sum of N100, 000 (One hundred thousand naira only). Being part payment for the construction of 20 bookshelves (to be delivered on January 1, 2019). Balance of N100,000 (One hundred thousand naira only) to be paid upon delivery of all 20 bookshelves.
The note could end there followed by the signatures of both parties. More detail can be added depending on what the parties have agreed, such as penalties for late delivery, payment of interest on delayed payment, etc.
Some agreements may seem too trivial to put in writing, but you never know in what direction an agreement will go. There are certain transactions that must be completed in writing. Transactions in land and copyright are two of such. All dealings in copyright – licensing, assignment, etc. – should be in writing. In this modern world where technology is driving many businesses, the most valuable asset of such companies is its intellectual property.
Recently, I heard a story about a start-up company that almost did not blossom because they had missed out on the important aspect of keeping a paper trail. There were three founders in a technology-focused company. All three founders had contributed to developing some proprietary software for the company, but there was no document assigning the rights in the software to the company. A few years later, one of the founders had moved back to his home country, the Ukraine and no longer had an interest in the business. Along came a venture capital firm interested in investing in the start-up, and they found this snag. The start-up had no rights to the intellectual property, it was still vested in the founders. And then it turns out that in the Ukraine, proprietary intellectual property rights are considered to be spousal property. A married person can, therefore, not deal with their intellectual property without the consent, in writing, of their spouse. This founder who had moved back to the Ukraine was now married. Luckily for the company, there was no bad blood between the founders and the spouse had no objection to the assignment of the rights to the company. While this situation had a happy ending, it cost the company time and money in rectifying this omission between London and the Ukraine. Solicitors in the Ukraine had to be paid, there were courier costs and so on, all the while dealing with the uncertainty of what would happen if the spouse objected to the assignment.
As I have already stated above, not every agreement requires the services of a lawyer. However, when large sums of money are involved, it is wise to use a lawyer. Keep in mind that a document drawn up by the other party’s lawyer is done to protect the interests of that party. It is important that each party in the transaction gets independent legal advice to ensure that their own interests are protected. There have been far too many stories of people in the creative industries signing contracts without legal counsel. In the end, cleaning up the consequences costs more than it would have cost if they had employed the services of a lawyer in the first place.
Nollywood film-makers must also be cautious as our films take flight into other jurisdictions. Before any distribution company takes on the task of representing a film, they will want to make sure that all the rights in the film have been cleared. A serious distributor will not take your word for it. There has to be written documentation and proof that there has been no break in the chain of title. No serious business wants to buy a lawsuit and that is exactly what they would be doing if they do not do the checks with the paper to back it up.
So, please, in this New Year, make it a habit to leave a paper trail, no matter how small the transaction. You just never know where the trail will take you.
Wishing everyone a happy and prosperous new year.
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