In the ever-changing world of business, deals and contracts play a vital role in achieving success. These agreements are carefully negotiated, with each party striving to secure the most favorable terms. However, there are instances when business people enter into contracts only to realize later that what seemed like a great deal has become less than ideal. This phenomenon, commonly known as “buyer’s remorse,” is both common and significant.
In the excitement of closing a deal, business people may overlook critical details or underestimate future market changes. This can lead them to commit to terms that, in hindsight, appear less favorable. For example, a long-term supply agreement with fixed prices may have seemed like a steal at the time, but unforeseen economic fluctuations have since impacted its profitability. Similarly, a partnership agreement that initially appeared mutually beneficial may have strained due to differing visions and goals.
When the realization sets in that the contract terms are less advantageous than initially thought, it is natural for business people to consider seeking changes. This usually involves negotiations with the other parties involved, aiming to amend the contract to better align with their current circumstances. However, this is where things can get complicated.
In practice, lawyers often come across clients who, upon realizing that their agreement is not as appealing as they believed, seek to change the terms or cancel the contract. Some clients may even claim that they did not fully understand the terms or relied solely on their advisors or lawyers when entering into the agreement. Interestingly, these clients are often experienced and educated business people who have been in the industry for years. They tend to attribute success to their own business savvy but disclaim responsibility when things don’t go as expected.
In extreme cases, a dispute may arise between the parties, leading to a court battle where one party seeks to enforce the terms of the agreement. Damages may be sought due to the other party’s refusal to comply with their obligations. However, it is crucial to remember that courts cannot intervene simply because one party regrets their decision or considers it unwise. Courts only operate when there is a violation of the law, an actionable wrong that requires a remedy.
As an example, the case of Mr. Rolando Dela Paz and L&J Development Co illustrates this point. Mr. Dela Paz lent P350,000 to L&J without a written agreement, but the parties verbally agreed to a 6 percent monthly interest. L&J made interest payments for several months but eventually stopped due to financial difficulties. Mr. Dela Paz filed a collection case, which eventually reached the Supreme Court. The court ruled that since the agreement was not in writing, it was illegal. Mr. Dela Paz was only entitled to the principal loan amount and had to return the excess payments. The court emphasized that despite Mr. Dela Paz’s claim of being deceived, he could have acted more prudently as a creditor.
This case serves as a reminder that entering into contracts can have consequences, and courts will not intervene unless there is a violation of the law. While it may seem obvious, many parties often need to be reminded of this fact. It is essential to consult with legal advisors and ensure that all terms and conditions are clearly documented to avoid misunderstandings and protect one’s interests.
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(The author, Atty. John Philip C. Siao, is a practicing lawyer and founding Partner of Tiongco Siao Bello & Associates Law Offices. He is also an Arbitrator of the Construction Industry Arbitration Commission of the Philippines and teaches law at the De La Salle University Tañada-Diokno School of Law. He may be reached at [email protected]. The views expressed in this article belong solely to the author.)
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