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Tuesday 11 December 2018
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Despite the Complexity and Headaches, Legal System is Necessary for Commerce

Matthew B. Wachter is a member of the Business Transactions and Trusts & Estates practice groups at MacDonald Illig. Wachter concentrates his practice in the areas of business and tax, business succession planning, and estate planning and administration.

Business owners are frustrated (and for good reason) by our legal system and its ever growing complexity.

The challenge of compliance with the myriad of laws and regulations today is formidable, and a business owner is often forced to seek out attorneys, accountants and other professional consultants for assistance. The legal system appears to many to be a mere drain on otherwise precious business resources.

Despite the complexity, and the resulting headaches and burdens that follow, the legal system provides the framework by which modern commerce is conducted in the 21st century economy.

From the largest manufacturer, to the local “mom and pop,” a business is reliant upon the shared set of expectations created by the legal system to conduct commerce. Without the rules and safeguards set forth by the legal system, a business owner would be hesitant to enter into an agreement of any size or scale, whether it be the sale of goods across town or a complex transaction involving multiple parties across state or international borders. Without a developed legal system, a business owner would have little guarantee of recourse in the event of a dispute.

A business owner is oftentimes most dependent upon the legal system when he or she is required to enforce the terms of a contract. As the document that sets forth the expectations of the parties in a business arrangement, a contract can take many forms, from a highly formalized, detailed and negotiated legal instrument to an oral agreement solidified by a handshake. No matter its form, level of detail or sophistication, a business owner is reliant upon the legal system when things go awry and they are forced to enforce the terms of an agreement in the event of a contract dispute.

For example, imagine your business entered into a contract with a company to supply goods or services. The contract was drafted years ago and you painstakingly negotiated what you believed to be every detail and term. The business eventually grows reliant upon the contract and the relationship becomes critical to your business, but after many years, the relationship deteriorates and your business is in jeopardy. The basic terms of the agreement are no longer being met by the other party, and the revenue of your business drops significantly. You are forced to take action to enforce the terms of the agreement, and your business, livelihood and the jobs of your employees are at risk.

Where do you turn for help? Can you enforce an agreement across state lines or international borders? What if the contract does not address matters related to dispute resolution, jurisdiction or the applicable governing law that controls in the event of a dispute?

The legal system anticipates each of these concerns and the myriad of other issues that arise in the modern economy.

The legal system has evolved into a complex framework of international treaties, federal, state and local laws and regulations that serve as the means by which a business owner is provided recourse when problems arise. While complex, and at times burdensome, a business owner would not have the ability or confidence to conduct affairs without the legal system.

This is not to defend overly complex and burdensome regulations, which are sometimes levied by ideology and political imperatives, rather than being fact based and consistent with just plain common sense. However, it is now important to recognize that our legal system also provides the certainty which makes commerce possible. In critically evaluating the legal system, therefore, it is important to look at all sides of the equation and not to throw the baby out with the bath water!

For more information, contact Matthew B. Wachter at 814/870-7717 or mwachter@mijb.com.