Legal Brief for June, 2010

Get It In Writing  

This is one of the most common pieces of advice that lawyers give to their clients, and for many good reasons!

To begin with, the human memory is not a perfect machine.  How often can you remember what you had for lunch yesterday, let alone recall what the details were of a conversation you had at the desk of the car rental agency six months ago?  Our minds simply do not retain information as well as we might like to think that they do.  Also, what you may remember well because it is significant to you may have been long forgotten by the person you were speaking with because it was of no consequence to them.

Another reason is the tendency that we all have for selective hearing.  Sometimes we hear only what we want to hear.  Other times, we start to tune out after a few seconds, thinking that we know what the other person is going to say.  Or we may be distracted by something, and miss a critical point that the other person is trying to impart to us.  This problem is compounded by the exact same things happening with the other person in the conversation.

It is very important to have matters documented when someone you are dealing with is making a promise to you.  A practical example is where a person arranges for a mortgage loan with a bank, with an interest rate that is fixed for the period of time until the loan commitment expires.  Sometimes the need for the loan is delayed, for example if the closing date on a house purchase is postponed.  In a case like that you may contact your loans officer at the bank and ask for an extension of the loan commitment, thereby protecting your interest rate (especially important in a market where interest rates are rising).  Your loans officer says, "sure, no problem" and you end the call feeling that all is well.

A couple of months later your friendly loans officer leaves her job for work elsewhere, and someone new takes over your file at the bank.  You phone them one day to check on your loan and you are informed that you will be subject to the new higher interest rate.  Your protest that you were "promised" that you were to be given the prior rate.  You are met with a response along the lines of "I'm sorry but there's nothing on our file confirming that and our standard policy is that once a loan commitment expires you are subject to any increases in our rates."  In a case like that, a person could have protected themself by having the prior loans officer provide them with a short letter stating that their prior interest rate would apply on their loan extension.  

"Get it in writing".  It's another example of the importance of another old adage - "better safe than sorry".