June 17, 2009

One-sided agreements

They are everywhere but why do people still get into them?

This is when one party insist on the opposing party to follow what the first party has set. Usually, the opposing party has less say as the first party has the advantage of holding something which the second party wants. It can be a valuable contract to building something like highways. It can be due to the power that the first party has like what government has when it wants to award a tender. It can also be banks which are offering credits to the consumers.

Usually, the second party has resigned themselves to be dictated by the first party in the first instance. There are also cases in which the second party know of cases in which they can get out of it if ever they need to. 

For the first one, the people who don't mind getting themselves into a one-sided agreement like taking a bank loan in which its agreement can't be amended is that they are willing to lose everything if ever they cannot repay the loan. They consider it is a calculated risk which they are willing to take at the then and now. They are willing to be a bankrupt, and even lose their collateral which can be their homes or their other assets. That is why banks usually do a lot of due diligence before they lend something to a company. They will the potential of the business and its future earnings.

As for the second scenario, there are a few who manipulates the loopholes or is willing to take the risk of fighting back if ever they need to. This can be those who knows of certain clauses in the agreement and will use lawyers to fight back with flimsy arguments if their back are push to the wall. These people can be those who took study loans, credit cards and even hire purchase loan. During my early days, these people were my main clients before I moved to the other side when my main clients are bank, like now.

It takes all kind to make the world...


Ratty said...

I dislike being on the wrong side of an agreement like this so much that I avoid very many things. I don't have a lot of things that others around me do because I avoid these so much.

kruel74 said...

I tend to do the opposite and even do it for some big companies

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