Under English law there are certain technical requirements for a contract to exist. There must be an offer, acceptance, consideration (£££) and an intention to create legally binding relations. Other jurisdictions have equivalent rules. If you meet these a contract can be created in the eyes of the law - and in most circumstances it does not matter if the accord is verbal or reduced to writing. Selling property is an exception.
A few weeks ago, I facilitated a seminar for colleagues responsible for contracts. We carried out a role-playing exercise to negotiate a contract change between a customer and a supplier - which was very engaging and constructive. The participants explored the different perspectives of the buyer and the seller with enthusiasm. At the end I asked if they had created a contract amendment (the attendees had been taught the basic contract rules earlier). To a person they all said no, essentially because any accord they reached had not been reduced to writing or gone through internal governance. There was some considerable consternation when I told them a legally binding agreement might have been reached orally as all of the legal requirements may have been met. To be fair many contracts specify a process for change to be in writing following a process - but in theory you could agree to change this! This particular assumption, that oral discussions involving two large organisations can never constitute a legally binding agreement, is amplified by the plethora of electronic communications we engage in on a daily basis which amplify the opportunity for some unintended commercial agreement to be reached. This risk can be mitigated by making meetings and communications “subject to contract”. However, it neatly illustrates my theme this week which is the dangers associated with making a false assumption about a situation in a professional context, especially where one set of competent professionals (which the seminar attendees definitely were – I learnt from them as well) stray into another area of expertise.
This is what could be characterised as a problem of perception: an assumption that oral discussions involving two large organisations can never result in a legally binding agreement until you have gone through all your internal processes and a written amendment has been signed (or executed electronically). This “assumption” exposes a lack of true in depth understanding, or rather a mistaken belief as to the reality of a situation which can be very dangerous and expose your organisation or clients to considerable risk. AI proposes that “Making assumptions as a professional can lead to significant dangers like miscommunication, poor decision-making, strained relationships, missed opportunities, and a lack of innovation, as it often results in acting on incomplete information, potentially harming projects, client relationships, and team dynamics by creating unnecessary barriers and misunderstandings based on unfounded beliefs; essentially, assuming something is true without verifying it can lead to costly mistakes and hinder professional progress.”
In effect you get what might be called the “earth is flat” syndrome where some fundamental misapprehension can have profound consequences. By the way there are apparently still plenty of people around the world who genuinely believe the Earth is flat – see this article Fighting flat-Earth theory! This is all now aggravated by the “knowledge” available through AI and the Internet generally which can give a false impression of true understanding, especially when we stray into other areas of professional competence. This makes being a professional with a particular area of expertise more demanding. Take for example the potential challenges to historians and archaeologists from AI images showing erroneous historical facts such as that giants helped build the pyramids (see https://www.youtube.com/watch?v=WelGSj6pbxo – it is in French but the pictures tell the story).
And this is not just about more extreme views. All of us as professionals can be limited in a strange sense by our own capability. I like this very good Harvard Business Review Article Don’t Be Blinded by Your Own Expertise which suggests that “expertise can actually severely impede performance, in two important ways. The first is overconfidence: believing that brilliance in one area leads to competence in another. The second is when deep knowledge and experience leave leaders incurious, blinkered, and vulnerable—even in their own fields”. It proposes some strategies to avoid this “expertise trap” including:
Challenge your own expertise. Cultivate more modesty, and remind yourself of your intellectual limitations.
Check your ego. ….try grounding yourself a little. Michael Bloomberg famously eschewed a lavish private office at his media company for a small, unremarkable cubicle.
Seek Out Fresh Ideas. Learning requires exposure to novelty. But when you’re an expert, it’s easy to become intellectually cloistered.
It wisely concludes:
“Exceptional leaders know that learning isn’t ever “finished”—it must be a lifelong pursuit, as humbling as it is joyful.”
See also this short but to the point articleStop Making Assumptions at Work which advises “It's important for business professionals to stop making assumptions at work. Otherwise, you may open the door to mistakes, costly misunderstandings, or imaginary personal conflicts. It's easy to assume that our colleagues or clients share the same priorities, have the same skills, or communicate the same way we do.” This can be in a technical area (as in my contract example above), general business or a people issue. This article 3 Ways That Making Assumptions Damages Your Team advises that “The problem is, taking on the opinions of other people and making assumptions is dangerous. It’s not only the negative opinions that can be a problem, but also the positive ones. Before you know it, you’ve made an assumption about somebody else, which may not be correct.” While this article observes that “Assumptions contribute in a major way to workplace miscommunication. Assumptions are taken as fact when there is no proof. They are often preconceived misconceptions about a situation, person, group, or task – likely based on past experiences with others.”
I think this can be quite a profound challenge and that mistaken beliefs can be damaging even within one profession. For example, the idea that to conclude a major corporate or commercial deal as a lawyer you must always work round the clock with no respite. Sure, this may at times be necessary and we have all done it (I once discovered you get discounted rates if you check into some London hotels after 2am!). However, I suggest that generally this is a working habit which is not good for individuals or the transaction. I recall one client who banned late night meetings because they feared the quality of the deal would suffer.
How then can we best avoid the sort of assumptions about contracts or otherwise that inevitably come up in our professional worlds? I think one of the answers is to be honest and recognise our limitations – be humbler and more prepared to ask basic questions and listen to and act on the answers.
As Douglas Adams the author of The Hitchhiker’s Guide to the Galaxy sagely observed "The most misleading assumptions are the ones you don't even know you are making."
A few weeks ago, I facilitated a seminar for colleagues responsible for contracts. We carried out a role-playing exercise to negotiate a contract change between a customer and a supplier - which was very engaging and constructive. The participants explored the different perspectives of the buyer and the seller with enthusiasm. At the end I asked if they had created a contract amendment (the attendees had been taught the basic contract rules earlier). To a person they all said no, essentially because any accord they reached had not been reduced to writing or gone through internal governance. There was some considerable consternation when I told them a legally binding agreement might have been reached orally as all of the legal requirements may have been met. To be fair many contracts specify a process for change to be in writing following a process - but in theory you could agree to change this! This particular assumption, that oral discussions involving two large organisations can never constitute a legally binding agreement, is amplified by the plethora of electronic communications we engage in on a daily basis which amplify the opportunity for some unintended commercial agreement to be reached. This risk can be mitigated by making meetings and communications “subject to contract”. However, it neatly illustrates my theme this week which is the dangers associated with making a false assumption about a situation in a professional context, especially where one set of competent professionals (which the seminar attendees definitely were – I learnt from them as well) stray into another area of expertise.
This is what could be characterised as a problem of perception: an assumption that oral discussions involving two large organisations can never result in a legally binding agreement until you have gone through all your internal processes and a written amendment has been signed (or executed electronically). This “assumption” exposes a lack of true in depth understanding, or rather a mistaken belief as to the reality of a situation which can be very dangerous and expose your organisation or clients to considerable risk. AI proposes that “Making assumptions as a professional can lead to significant dangers like miscommunication, poor decision-making, strained relationships, missed opportunities, and a lack of innovation, as it often results in acting on incomplete information, potentially harming projects, client relationships, and team dynamics by creating unnecessary barriers and misunderstandings based on unfounded beliefs; essentially, assuming something is true without verifying it can lead to costly mistakes and hinder professional progress.”
In effect you get what might be called the “earth is flat” syndrome where some fundamental misapprehension can have profound consequences. By the way there are apparently still plenty of people around the world who genuinely believe the Earth is flat – see this article Fighting flat-Earth theory! This is all now aggravated by the “knowledge” available through AI and the Internet generally which can give a false impression of true understanding, especially when we stray into other areas of professional competence. This makes being a professional with a particular area of expertise more demanding. Take for example the potential challenges to historians and archaeologists from AI images showing erroneous historical facts such as that giants helped build the pyramids (see https://www.youtube.com/watch?v=WelGSj6pbxo – it is in French but the pictures tell the story).
And this is not just about more extreme views. All of us as professionals can be limited in a strange sense by our own capability. I like this very good Harvard Business Review Article Don’t Be Blinded by Your Own Expertise which suggests that “expertise can actually severely impede performance, in two important ways. The first is overconfidence: believing that brilliance in one area leads to competence in another. The second is when deep knowledge and experience leave leaders incurious, blinkered, and vulnerable—even in their own fields”. It proposes some strategies to avoid this “expertise trap” including:
Challenge your own expertise. Cultivate more modesty, and remind yourself of your intellectual limitations.
Check your ego. ….try grounding yourself a little. Michael Bloomberg famously eschewed a lavish private office at his media company for a small, unremarkable cubicle.
Seek Out Fresh Ideas. Learning requires exposure to novelty. But when you’re an expert, it’s easy to become intellectually cloistered.
It wisely concludes:
“Exceptional leaders know that learning isn’t ever “finished”—it must be a lifelong pursuit, as humbling as it is joyful.”
See also this short but to the point article
I think this can be quite a profound challenge and that mistaken beliefs can be damaging even within one profession. For example, the idea that to conclude a major corporate or commercial deal as a lawyer you must always work round the clock with no respite. Sure, this may at times be necessary and we have all done it (I once discovered you get discounted rates if you check into some London hotels after 2am!). However, I suggest that generally this is a working habit which is not good for individuals or the transaction. I recall one client who banned late night meetings because they feared the quality of the deal would suffer.
How then can we best avoid the sort of assumptions about contracts or otherwise that inevitably come up in our professional worlds? I think one of the answers is to be honest and recognise our limitations – be humbler and more prepared to ask basic questions and listen to and act on the answers.
As Douglas Adams the author of The Hitchhiker’s Guide to the Galaxy sagely observed "The most misleading assumptions are the ones you don't even know you are making."
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