The Release: Your Secret Weapon Against Unpleasant Legal Surprises

Have you ever been in an argument with someone only to have them dredge up something from the past?  Some perceived slight that you thought was long over and done with?  It’s sooo frustrating, isn’t it? 

Now picture this: Your business hires a contractor to paint your offices.  They set up some scaffolding and then proceed to make a mess of your walls and workspace.  They fail miserably on delivering their promise, and you refuse to pay them.  Next thing you’re being hauled into court for nonpayment. 

The judge splits the baby.  You end up paying a nominal amount, but you get to keep the scaffold to compensate you for the damage done to your walls and the cost of having someone else come in to fix it.  A few months later, there’s a knock on the door.  It’s the local sheriff slapping you with handcuffs and arresting you.  

Why?  Because you kept the scaffold. 

Wait a minute!  How can this be happening?  That contractor dispute is over.  A judge said you could keep the scaffold.  

Well, it turns out the contractor leased the scaffold.  He didn’t own it.  It wasn’t his to give away.  Now the real owner of the scaffold is coming after you for property conversion, i.e. theft.

Luckily, this nightmare isn’t happening to you.  But disputes are part of the business landscape, and not getting the proper closure means that past disputes can take a new shape and form and come back to haunt you.  (If you think this is some form of double jeopardy, please note that double jeopardy only applies to criminal matters, not civil.)  

Fortunately, there is something you can do to protect yourself in such situations.  If you want bygones to be bygones the best thing to do is to get a release.

A release is a written contract that basically says in exchange for X you will release any and all claims or liabilities that may have accrued against me to date.  Casting a broad net will ensure that claims for past wrongs can’t be resurrected in a new form. 

A good release will also address third-party claims that the other side has some control of, such as the scaffold owner.  The contractor in my example above needed to square his leasehold obligations, but instead he passed the buck.  

I appreciate that the likelihood of your business having a dispute with a painting contractor may be slim.  Yet the odds are much higher that you may have a dispute with a vendor, a customer, or an employee.  In those situations the same rules about obtaining a release apply.  When negotiating a severance package with an employee, for example, you’ll want to have a release protect your business against claims from the employee’s family or estate, among other things.

Putting the right language in place up front will save you time and aggravation at a later date.  It will give you the closure you deserve and keep the past where it belongs: behind you.  Keep this tip in your business arsenal and be sure to use it when the need arises.

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Hanna Hasl-Kelchner is a business legal strategist, author, speaker and trainer who teaches and coaches business people on how to avoid lawsuits.  She is the author of The Business Guide to Legal Literacy: What Every Manager Should Know About the Law and forthcoming How to Turn Your Business into a Litigator’s Chew Toy: Taking the Bite Out of Legal Liability.  Follow Hanna on Twitter @nononsenselawyr and her Chew Toy sidekick @acelitigatorwit.  Subscribe to this blog’s RSS feed to get the latest updates.