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Eliminate your contracts

Posted by Tim Cummins, President of IACCM, Professor, Leeds University School of Law; Chair, International Commercial & Contract Management | Aug 23, 2018 3:44:00 AM

Elon Musk is on a mission. Writing on Twitter, he said: “We’re trying to get rid of contracts completely. Should just be ‘tap here & you get your car’. Then, if you don’t like it for any reason, just return it like any other product.”

Unfortunately there doesn’t appear to be any specific plan or timeline for eliminating contracts for Tesla customers – but might it be that Mr Musk is actually shooting for the wrong target?

Eliminate or energize?

The issue which provoked this statement appears to be linked to ’ease of doing business’. Mr Musk was frustrated by the difficulties and delays that some customers apparently faced in getting contracts in place. Many other executives share this view and see contracts as a source of complexity. Frequently they are right, but that’s a matter of choice and, with greater focus, much of that complexity could be eradicated – a much better solution than ‘elimination’ of contracts.

Contracts SHOULD provide a mutual and mutually understandable framework of rights and responsibilities. They should offer an acceptable level of balance that protects interests. Tesla has legitimate interests, as does its customers. For example, it expects to get paid. It expects to be able to enforce rights if it is not paid. A customer wants undertakings regarding quality and clear rights in the event that there are defects.

But none of this means that the resulting terms and agreement need to be complicated to understand or to access. They could be available via a video, in multiple languages. They could even be entertaining. I am sure that Mr Musk’s creative4 mind could come up with some amazing ideas on how to make Tesla’s contracts a reputational asset. And that would far better serve the interests of his company and its customers than simply eliminating contracts entirely.

So have you any creative ideas for designing contracts that would best fit the Tesla brand and image? Perhaps we can turn this into a competition for IACCM members!

Topics: contract /commercial management, contracting excellence, contract management

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