How to Use Latest Technology for Best Contracting Practices

Technology changes the mechanics of long-term contract relationships.

(If you'd like to listen rather than read, I have posted at the end a soundcloud of me reading this post.)

These new mechanics are necessary to maintain a successful commercial relationship in a rapidly-shifting world.  Here are three examples:

- In Crowdfunding, email and social media allow the project leader to keep backers informed and heartily invested in the project as it unfolds.

- In Corporate Procurement, private online auctions among prospective vendors can yield for the buyer better terms and a reduction in the time between request-for-proposal and signing of the contract.

- In IT Outsourcing, instant messaging and telepresence allow the enterprise customer and the service provider to work as flexible partners after their relationship starts:

Contracts did not work this way back in the age of typewriters and fax machines.  Written contract relationships were more rigid and formal.  Written updates to investors -- and written amendments to existing contracts -- happened only laboriously, sporadically.

Fax Machine Annoyed Client

Let me give an example by telling a story.  In the early 1990s I had a client for whom I did much work.  The client used fax but not email.  I wanted to keep the client well-informed of my work; I wanted to ensure the client knew of my progress and had opportunity to guide me if I strayed in the wrong direction.  So I routinely sent updates to the client by fax machine.

Fax is instantaneous like email or text message.  However, fax is much more awkward than email or text message.  It (normally) prints out sheets of physical paper.

Therefore all my faxes annoyed my client in a very mild way.  In December, my client gave light-hearted gag gifts to employees and contractors (like me).  He gave me a so-called "fax catcher"; it was a basket for catching all the sheets of fax paper I sent to his office.

My client was not being offensive, and I did not take offense.  His gift was just a well-meaning way to say that he felt it was odd or funny to receive so many updates by this relatively new technology known as the fax machine.

Result:  the fax machine may not have been very effective for me as I tried to maintain a good relationship with my client.  For that relationship, I might have been wiser to make more use of the telephone or airplane flights to visit the client face-to-face.

Electronic Communications Have Become More Effective, and They Will Become Even More Effective in the Future.

However, today in business we routinely send lots of little updates by technology that is less clumsy than fax.  We use email, text message, online chat or instant message. Smart contractors will use these unobtrusive technologies -- and new technologies like them -- to improve the contract relationship.

Sometimes the improvement will just prevent misunderstandings. Sometimes the improvement will allow styles of contract relationships (like crowdfunding or vested agreements) that did not previously exist in history.  Other times, the improvement will provide to the smart contractor a negotiating advantage.