Credit agreements

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Solving daily problems using the Threefold approach – Credit agreements

 

17th February, 2020

 

It seems quite correct to say that every ‘normal’ human soul understands each of the three spheres of the Threefold (Humanity, Economic and Equality) very well when the concepts are put to them individually – one at a time.  After understanding them individually, one can then start to link them.  Let’s check this by doing an example of a daily issue in business.  The issue must be placed, using the image of the Balance Beam, at the centre point of our focus.  The centre point is completely stable and never moves.  This is what we want to do with the issue to be addressed in a Threefold way, place it at the centre of our focus and don’t move or change the issue.  What we then do is approach it from each of the three spheres individually.  From here we can make the connections between the three spheres and how they need each other to be seen separately and the effect this then has on the solution.  So, let’s take an example common in business and test the value of Threefold thinking out by placing Credit Agreements at the centre of our focus.

The way people contract in business today goes something like this: 

You want an account with us, you complete this credit application form.  The terms of these credit applications are mostly completely one sided in favour of the supplier.  There are no consequential damage clauses, meaning that if the supplier provides a defective product, they will only replace the product but not any associated costs of removing and refitting, or lost production or the like.  Other clauses like ‘we can deliver late’, ‘we can supply something similar’, and so on are often included.  There are many clauses setting down payment terms, passing of ownership conditions and more.  When the customer and supplier can live with each other, all is well.  When there is a dispute,  personal threats of going to social media,  powerful friends and connections, or the threat to hand it over to the litigators to resolve for them in law only are often verbalised.  These legal professionals generally charge a fortune to put a case before an uncertain system and uncertain Judge.  Once the case has a winner and a loser, then the process goes on in that a new credit relationship is entered into with others and the same outcome is likely.  What could be different?

 

This modern reality plays out daily.  These contracts say nothing about fair play or how to ensure that the economy of each is respected.

 

A Threefold way of thinking about this would go something like the following:

 

Firstly, both the supplier and the customer would want the other to be really effective in what they were doing for the material needs of others.

In Threefold thinking, the more effective others are in providing for the material needs of society, the cheaper everything becomes for the whole.  A relationship would be based on each doing their best not to impede the other’s efficiency or relevance.

Secondly, the credit agreement would clearly define what the supplier must get right and what the customer must do when using the product.  It would make sure that the accountability of both was defined and clear so that the economic cost of failure of the product or the correct use of it was clear from the outset.  Both parties would want to partake in this agreement process very carefully,  with the idea that it is not one-sided but fair and equitable.  The product would have to comply with National standards as would the use or installation of it.  There would be a table of costs of consequential damages that are fair rates, not rates that the customer determines in a moment of rage and bitterness or that the supplier sets too low.  Both parties would agree that they would meet their own terms of the agreement so that the economic consequence of their transactions would be most likely to benefit each other and that the one who transgressed would be the one to pick up the tab based on the objective collecting of facts of the failure.  Both would want this objective assimilation of facts.

Thirdly, there would be agreement on the conduct of the parties between each other.  They would agree to hold themselves to the economic commitment to each other, and to the terms of the agreement out of their own dignity.  Comments like, ‘I have social media’ or ‘a husband that is a lawyer’ simply won’t work.  As soon as there is an emotional attack on the humanity of another party, the economic side of the transaction becomes severely impeded because the agreements get ignored and the parties start claiming rights that were not agreed.

The modern Threefold must hinge on all three spheres being cherished individually in clarity, but in search of balance as a whole.

 

In order to not only write about this, but to do it in this modern bowl of confusion situation – normality some would say – one could step into this new way by doing the following:

  • Use your current credit agreement, but add a Fairness Contract that overrides the ‘no consequential damages’ clause.  The Fairness Contract would agree to consequential damages at pre-determined rates, provided the customer upholds their dignity and does not attack your staff personally, threaten slander or social media, lie, or similar.  If they do, then the ‘We’ll pay for our mistakes, you pay for yours’ which is what is just and right and good for the economic side of the transaction, reverts to your standard terms and conditions when the unfair rights revert back to you as the supplier.  If selfless dignity remains present and intact, so does the Fairness Contract.  If the supplier is not able to stick to the letter of the agreements, the Fairness Contract remains intact too.

 

The customer is King up to a point, but one cannot accept that suppliers pay for the indignity, laziness and ignorance of customers, neither that the customer pays for the same from the supplier.  Customers and suppliers need to be more patient and clear in their agreement making, want the other to succeed economically, but also be strong enough to meet the commitments that they make to each other from the outset with self-restraint and objectivity to the whole transaction.

 

In summary, the Threefold conceptual background adds value to the daily reality of the confusion in credit agreements.  Using the Threefold concepts to untangle the confusion, one sees clearly the economic aspect, the rights aspect and the humanity aspect.  They all play a part and must each be consciously addressed in these transactions so that the relationship actually works.  Without any one of them being consciously addressed, the working relationship will fail more easily.  This approach makes it clear who pays what and why. Sales people can be confident that they need not accept personal attacks and they can be confident in knowing what the customer is entitled to and what not.  As a customer, the same applies.  In both cases, the customer and the supplier need to meet a certain level of self-accountability, patience, clarity, objectivity and so on.  This is the real added element.  What a positive thing to support.

4 Comments
  1. Hello David. I hope you are well. Thank you so much for the information shared. The information is full of insights. I learnt several key things in your article.

    1. A long lasting relationship is based on the customer and supplier doing their best. All have to focus on the economic, rights and humanity aspects.

    2. Once the efficiency and relevance of each party is impeded the relationship and performance is negatively affected

    3. The engagement between the customer and supplier must be fair and equitable to yield mutual benefits.

    4. The humanity of each party must be respected.

    5. Selfless dignity is aligned to fairness contracts

    6. In using the threefold approach Both parties(Customer and supplier) need to meet certain levels of self accountability, patience, empathy, clarity, commitment, objectivity etc.

    • Dear Robert, you read what I tried to write. Well done and thank you. Kind regards, David.

  2. Thanks David and Chandre

    I am inspired to look at this with our student contracts. I like the dual responsibility and the commitment of excellence.

    • Thank you Helen. Nice to know that you are still striving. Kind regards, David.

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