Big Red Car here. Going to be a warm, sunny day with some isolated thunderstorms here in the ATX. Well, Old Sport, it’s summer in Texas and that forecast could probably be bandied about until say — the first Longhorn football game?
So The Boss has been visiting with some of his young and not so young CEO clients and has been mumbling about when is a deal a deal. A deal is not done until the check clears.
Commitments are not deals
We live in a funny time wherein everyone is on edge because of perceived legal liability. I think if I had it all to do over again, I would go to law school instead of becoming the best looking Big Red Car in Texas. [Haha, Big Red Car, you are a freakin’ car, not a person. Get over yourself. Cars do not go to law school and only in Arkansas can a car practice law and only family law anyway.]
As a prelude to finalizing a deal of any kind — financing, buy/sell, employment — folks will make a “commitment” or “offer” to indicate the terms of a deal. In the real estate business, as an example, it is a common place practice to offer a Letter of Intent as an ordinary course of business. It is a good practice.
But, Grasshopper, that Letter of Intent is not a binding legal commitment. It is simply an expression of interest. Again, it is not binding.
The Big Red Car is not making war against or speaking ugly about Letters of Intent. Au contraire, Old Sport, the Big Red Car is saying know them for what they are and for what they are not.
Commitments as evidenced by a letter of intent are a great way to document the understanding prior to entering into a binding contract or asset purchase agreement or employment agreement or some other legally binding document which converts the intentions of a Letter of Intent into a legally binding agreemenet.
Folks will break your heart
So, Big Red Car, we think we knew that already. Well, maybe. So why are you telling us the obvious? A deal is not done until the check clears.
Folks will break your heart and will not follow through in a legally binding agreement what they have stated in a Letter of Intent. That is a reality of the times in which we live.
Oh, sure, there are still men and women whose handshake overpowers a ream or two of legal documents. In certain parts of the country and maybe even in certain industries, a person’s word is their bond.
Today, cash is king. It is a buyer’s market. Employers have inordinate power in the marketplace because good jobs are scarce. There is simply a lot of tension in the world and that translates into the necessity to move with caution.
A deal is a deal when the check clears
So, Big Red Car, I think I understand what you are saying but how do we put this into practice? A deal is not done until the check clears.
Even when a Letter of Intent is transformed into a legally binding Asset Purchase and Sale Agreement, be cautious and know what the due diligence or inspection period is as laid out in the agreement. Do not mentally spend the money. Hold off until the check clears and the money is in your account.
Do not resign from your current employment position until you have a firm, unassailable commitment in writing and your new employer has stated in writing that you are hired and there are no outstanding issues — no drug tests, no background investigations, no credit checks, no reference checks. Make absolutely certain that your new employer knows you are relying — a legal concept, Old Sport — on their offer, your acceptance and the acknowledgment by them of your acceptance in order to resign your current position.
[Make damn sure to treat your former employer with honor, dignity, respect and consideration. Do not bolt for the door with just two weeks notice. Your new employer is watching and if they have any concerns as to the way you treat your former employer in the transition, know that they will never treat you better. This is a critical tell as to how folks treat each other in the marketplace. Pay attention. Pro tip.]
The Big Red Car is counseling caution, a bit of healthy skepticism and reality v expectation in all your dealings. Do not allow your impatience to burn you. Trust but verify. Check, doublecheck, re-check EVERY’THING. Do your deals with these considerations in mind.
Hey, this Sunday is Father’s Day. Do something nice for your dear old Dad, if you are so lucky to still have him with you. The Boss’s Dad just turned 95 on 2 June 2013. The Boss was up there to celebrate. The Old Man is a treasure of life experience, sharp as a tack and a WWII vet.
But, hey, what the Hell do I know anyway? I’m just a Big Red Car.
