Here's the problem: if they do end up suing you, and you just accepted whatever provisions they put in their contract, you're going to be screwed. The first version of a contract always strongly favors the party providing it, it's not malicious, it's just the right way to do it.

It is never right to proffer a deal that you know to be unfair to another party.

You're presuming that it's possible to determine that, but generally it isn't. Generally, I know what's fair for _my business_ and it's the responsibility of the other party to determine what's reasonable for them. Different parties will each have their own evaluation of a contract term - I may view something as a major risk and want protection, while the counterparty doesn't view it as likely and is happy to give that protection. This is why negotiating deals can be so interesting.

Providing a contract that is favorable to your own needs, while not deceptive, is in no way unfair or unscrupulous. The counterparty always has the right to negotiate or simply refuse to execute the contract. You can't expect to anticipate the needs of both parties and to do so would just make negotiating a deal more difficult, because you'll have less flexibility to give the other side what they need.

It's not your job to anticipate all of the needs of the other party, but you should offer something that seems like it would be reasonably acceptable to each party. You shouldn't offer a contract you know to be "heavily biased" to the author -- you should write up a contract that details a deal you consider reasonable and fair and a deal you believe that the other party will find reasonable and fair, and further negotiations can flow freely. If you offer a deal you know to be unfair and the other party executes it, you should understand that they probably do not understand the terms or do not feel they have an option except to execute it, and that's exploitative. You can't really just shrug it off by saying, "Well, if they accepted it, they must think it's a fair and even-handed deal!" That's not realistic.

Quoth John Taylor, third President of the Mormon Church:

"It is a common thing among a certain class of men to say I made a splendid trade to-day with Brother So-and-So. But did Brother So-and-So make as good a trade out of you? If he did, all right. But if you, because you happen to be a little smarter, or shrewder on a trade than your brother, have got the better of him, it is not all right, it is all wrong, and I do not think it a credit for a man to be possessed of that kind of smartness. I do not think it a credit to anybody to want something which belongs to somebody else."

> But if you, because you happen to be a little smarter, or shrewder on a trade than your brother, have got the better of him, it is not all right, it is all wrong, and I do not think it a credit for a man to be possessed of that kind of smartness.

Actually, the best kind of deal is the one where each person believes they got the better of the other. To borrow an example that is not my own, suppose two people are arguing over who should have an orange. An arbiter who insists on fairness cuts the orange in half and gives each of them one half. The first person promptly peels his half and eats the orange segments, throwing away the peel. The other person peels his half and uses the peel to bake a cake, throwing away the segments.

You can imagine that if each person got his way, each would feel he had the better of the other, and yet, both would be fully satisfied.

That example does not make any sense to me. Why would one side feel they'd gotten the better of the opposite side just because both are fully satisfied? Surely interests must be aligned for any trade to be successful and satisfactory to the involved parties, but in your example, each man is happy to have had what he wanted, and neither executed a deal feeling they had been shafted. Neither took an unfair advantage of the other or left the other with an unfair share as enabled by circumstance.

An instance of an unfair deal is exploiting the ignorance of a newcomer by offering to take something that has great value locally for a price far below what your neighbors would pay before the newcomer realizes that his belongings have much greater worth in his new vicinity than they had in the old. This is a fundamentally predatory deal, and even if you lay all of this out in the fine print, it's your duty to establish at least a basic reasonable assurance that the party at the other end of your trade understands the circumstances surrounding it and is satisfied with the proposed trade.

Another example is that of an individual in desperate straits who is required to offload a good he'd otherwise keep or sell for a much higher price. It is reasonable to expect this person to sell his goods, but it is not fair to exploit his unfortunate circumstance and purchase the goods at prices in extreme disproportion to market value. While the person may even offer the good at an absolute bargain basement price in an attempt to move it as quickly as possible, I do not believe it is moral to buy something at much, much less than its normal value if you have the means to pay more. Perhaps some discount is reasonable in order to move the merchandise quickly, but it should not be disproportionate to the circumstance; even if the seller believes he'll be happy with the trade, it's not very likely that that happiness will stay. You're better off just biting the bullet and at least paying something that resembles the low end of market value.

Remember that when it comes down to it, our lives are all about the people that are part of them. Things and money come and go, bank accounts ebb and flow; people last forever, and people give real value to experiences and things. It's not worth shafting your neighbors left and right to save some cash.

I recognize that many disagree and believe that it's "every man for himself" out there, and that you should take advantage of your neighbor when you can get it. I believe that is fundamentally wrong, no matter how many others believe otherwise.

> That example does not make any sense to me. Why would one side feel they'd gotten the better of the opposite side just because both are fully satisfied?

They'd feel this way if they did not know what the other side intended to do with what they received. I think it's pretty common to keep quiet on the the reasons why you want something during negotiations, to avoid giving the other party leverage.

I generally agree with you about fair and unfair deal-making. I think it is always important to consider more than just money when you are making deals, for example, you also are dealing in your own reputation when you make agreements with people. A deal that is grossly unfair to the other party from a financial perspective may also carry a heavy cost to your own reputation (which could also have future financial consequences).

That said, I don't think there is anything immoral in coming out of a deal in a better position than the person you made the deal with. Not every deal is equally beneficial to all parties involved. I have made some deals where I am sure the person I dealt with got a better deal than I did, but so long as I didn't feel ripped off, I was okay with that.

"It's not your job to anticipate all of the needs of the other party, but you should offer something that seems like it would be reasonably acceptable to each party."

I don't agree that it's possible to know what would be "reasonably acceptable" to the other party when I don't know the inside details of their situation. I'm not their lawyer. Should an agreement be commercially reasonable? Of course. But there's a gulf between that and "reasonably acceptable."

Define "unfair". Every contract I've ever seen has been biased in favor of the firm writing the contract. Is this "unfair"?

If you want "unfair" - try looking at some term sheets....

Yes, it is unfair to offer a contract that is "biased" to the firm that writes it (within reasonable definitions of "biased").

But it might be legal.

You're assuming companies act rationally and won't sue you if it costs them money. That is a dangerous assumption: one guy that you pissed off is enough to send you down a dark hole.

Also some companies have lawyers as employees. They have to do something with their time.

I know of trading firms who will sue to try to enforce a mostly unenforceable non-compete agreement on a trader who leaves just to piss them off and waste their time and money to protect themselves (and try to scare others from leaving in the future). But...this is the exception. No one said hedge funds were rational!

If you accept their version of the contract verbatim, chances are they haven't specified a maximum dollar value of your liabilities to them. Of course, it might still be a losing game for them to sue you into bankruptcy, but that doesn't mean they won't try.

I think that 'unlimited' personal liability needs to be put in perspective; I mean, you take the same risk every time you drive anywhere. Think of it; If you kill someone, and you very easily can when operating a motor vehicle, you can easily be liable for millions of dollars of civil damages. (not to mention the death of another human being.)

Yeah, you have insurance when you drive, but that only covers you up to a certain limit. you can get liability insurance for your business that does the same thing; and judging from the relative costs of those two types of insurance when I've gotten quotes, when you are small, you should probably worry a lot more about the liability you incur when you drive than the liability you incur when you sign a contract.

> So, if the dollar value of some provision in the contract is not worth the cost of a lawsuit, in a way, it is kinda immaterial to the agreement because it would cost more to collect.

It reminds me a little of something Ferriss wrote about in 4HW - just telling some of his minions that if it would cost <$100 to make a problem go away, they had his standing permission to spend that <$100.