Sometimes It’s Law OR Business

In 1971, an attractive, young woman paused with her six year old son at the doors to his very first martial arts class. Back then, martial arts for kids was a new and fairly rare thing. Now we call those days the “blood and guts” era of martial arts training. As a six year old, it was rare for me to go an entire month without a bloody nose.

The point is that I’ve been around martial arts a long time. I started learning in the 70s, started teaching in the 80s, and I’ve been considered a master since the 90s. I’ve taught at national and international conventions for professional martial artists, written books, and worked with instructors from across the country and around the world. Thousands of instructors have used my material to help them make decisions balancing law, liability and practical business needs.

A few years later, I attended a panel discussion at a different martial arts business association. In martial arts, there is a great debate on contracts. Do you let students sign up month to month, or do you make them sign up year by year?

That’s a business question. Connected to that was a legal question.

A young man stood up with the microphone to ask his question. He was new to the martial arts business. He was leaning in the direction of using contracts, but he had a question about the one year agreements and what you do if someone quits.

“Do you enforce the contract even if the student stops coming to class?” he asked.

The lawyer answered first. “No one ever objects to paying on a contact they signed.”

The lawyer expounded a little more on his point. If the former student didn’t want to pay, you could just take them to small claims court. (But if no one minds paying, why would you ever need to take them to court?) Just the threat of court is usually enough to get most people to pay since there is a valid, signed contract.

As the lawyer gave his answer, you could see the uncomfortable shifting and slight squirming by the school owners on the panel. Some of them owned multiple schools. One of them had 19. These were people who had been martial arts professionals and business owners for decades.

The oldest one jumped in first. “I never enforce contracts against students who leave. Ever. If word gets out that I do stuff like that, no one would ever sign a contract with me again.”

Other instructors jumped in, too. The closest any of them came to agreeing with the lawyer was that one of them would let someone buy themselves out of their contract for half-price.

Basically every single business owner disagreed with the lawyer.

Does that mean he was a bad lawyer? Not at all. He was a very good lawyer. He gave the legal answer that was true in his lawyer-world.

It just so happened that it was really bad business advice. It was bad enough that every single business person on the panel disagreed with him.

The business people went on to explain that in this increasingly technological age, if you get just one person legitimately angry with you who decides to tell the world, reviews could be posted in review sites you’ve never even heard of.

Can you legally enforce a contract? Of course you can. That’s the law.

Should you? That’s a business decision and lawyers who only know the law can be really bad at making good business decisions. Every once in a while it’s law OR business.

That’s why there’s “the law” and then there’s good business judgment. Making the judgment call is your job as the business person.

After all, it’s your business.