How strictly do you enforce contract terms when someone backs out of a deal?

Our reader poll today asks: How strictly do you enforce contract terms when someone backs out of a deal?

• Very: That’s what contracts are for. There need to be consequences 42.22%
• Somewhat: If it’s last minute with no good reason, we’ll enforce. Otherwise, not really 41.21%
• Not strictly: We’ll only enforce terms in the most egregious cases 13.56%
• Not at all: We may as well not have signed a contract 3.01%

Terms matter. A large portion (42%) of you strictly enforce contract terms when one party backs out of a deal and another large portion (another 41%) enforce them if it’s a last-minute change. Contracts have consequences. Parties should expect to be held to the terms of an agreement. The implication for you is, as you’re going through a contracting process, be sure everyone clearly understands all the terms and that the triggering of a penalty clause won’t cause excessively punitive consequences. Make consequences proportionate to the offence otherwise you run the risk of permanently damaging a relationship or getting pulled into litigation which may be seen as a cheaper option than paying the penalty. Fair contracts with reasonable consequences are always a best practice.

– Mike Figliuolo at thoughtLEADERS, LLC

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These results were originally a SmartPulse poll in SmartBrief on Leadership which tracks feedback from more than 240,000 business leaders. Get smarter on leadership and sign up for the SmartBrief on Leadership e-newsletter.