Last week induced in me a great deal of reflection on my life. Last week was Catholic Schools Week, and I am a proud alum of St. Mary’s Catholic Elementary School in Leipsic.
A large part of my education in a Christian school was to learn the importance of trust. I was always repeatedly taught that providing other people trust in your reputation and character is the most important thing you can give, other than love itself.
Trust is the firm feeling in the reliability or strength of someone or something. Trust is a basic foundation of human interaction. And, as such, caution over trust is embodied in such time-honored sayings as “Don’t count your chickens before they hatch,” and “Harvest is not done until the grain is in the bin.”
In spite of or because of those wise sayings, I am regularly asked by my landlord clients what they should seek in property managers or tenants. My answer is always the same: Trust.
Our legal system is designed to create/increase or at least maintain/ensure trust so that business and commerce can operate. For instance, almost every purchase made at a local retail establishment creates trust in the buyer that the product is potentially replaceable (if defective) by the retailer, simply through the retailer providing a receipt for the product purchased.
Trust is also often guaranteed to be kept throughout the durations of certain business transactions by using legal documentation. For instance, banks seldom personally know the people who may borrow money from those banks for a house, business or education. Mortgages and security agreements (similar to mortgages for property that is not real estate) are prime examples of legal tools used to create trust. Essentially, mortgages and security agreements are formal promises that induce trust.
Similarly, trust is often purchased in business transactions. If a person’s trustworthiness as to financial ability/willingness to pay back a loan is in question, the person may pay a premium to the lender to compensate for the lack of trust. That premium is usually a higher interest rate.
Imagine if there was no ability to use a vehicle as collateral for a loan? In such a situation, a rich person or company (like a lender) would not allow any borrower to use a purchased vehicle until the vehicle was fully paid-for. If a newer vehicle was the only way for a potential borrower to get a promotion, that lack of trust would preclude that potential borrower from upward mobility in our society, which upward mobility adds to humanity’s growth and success.
Our legal system is not just a way to resolve disputes. Our legal system’s structure of laws, paperwork, expectations, mutual understandings and reliability can actually sometimes maintain or create the necessary expectations and reliability sufficient to create trust that allow people to have enough confidence to do business with each other.
Hat tip to my law school professor Douglas Whaley, who taught me that our work as lawyers creates in addition to fixing.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at [email protected] or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.