From Commodity Trading to Contract Law: What Entrepreneurs Can Learn About Risk

Before I became a transactional attorney, I was a grain trader. If you’re ever in an airport, you can spot a grain trader rather easily. They will be the person in a polo, grain company brand over their heart, pacing back and forth, trying to get just a little more phone time in before they take off to someplace else. On any given day, I might have fielded a hundred phone calls and reviewed well over a hundred pages of contracts before heading home. The pace was relentless, but what mattered most was precision. If you didn’t know the rules, the actual, technical rules, and understand the “industry rules,” you could expose the company to hundreds of thousands of dollars in losses from a single mistake. The margin for error was zero.

I learned early that success isn’t just about growth or hustle or vision. It’s about risk. And managing that risk isn’t just a review of language or something you can download off of Microsoft 365 (or, heaven forbid ChatGPT). It’s legal. It’s operational. It’s human.

Now, as an attorney, I help entrepreneurs and business owners navigate transactions, partnerships, and the occasional mess that comes with being in business. And what I’ve come to realize is that the lessons I learned in the grain industry are as relevant to business builders as they were to me when I was hedging futures in a volatile market.

Let me share a story that still sticks with me.

The Call You Never Want to Get

Years ago, I had a string of open contracts with a mid-sized counterparty. Let’s call them “Prairie Valley Equity” (PVE). They were on the hook for a sizable number of bushels in the forward market. Prices had moved in my favor, significantly. We were well bought, the board was screaming, and execution was in the final stretch.

Then I got the call…

Their trader, a guy I respected, told me plainly: “We’re not sure we’re going to make it. We’re bleeding cash on margin calls, and we’re underwater on physical. Floods are causing a freight delay. We don’t want to break contracts, but we might have to claim “FORCE MAJEURE.”

If you’re reading this and you’re neither a grain trader nor an attorney, you may have heard the term ‘force majeure’ mentioned on the news. But for those who work closely in the grain industry, or who’ve ever had to negotiate how force majeure is defined in a contract, it carries a weight that’s hard to explain. The words themselves feel almost ominous, like the name of a shadowy figure no one dares to mention aloud.

Now, every contract I had with PVE was rock solid, and no way were they even close to claiming force majeure. The NGFA trade rules were on my side. The market was on my side. If I wanted to, I could’ve enforced every contract, taken them to arbitration, and probably won easily.

But the reality is that I also knew two things that don’t show up in the NGFA trade rulebook:

1. What goes around comes around.
2. Broke counterparties can’t pay.

What good is being “right” if the other side folds? You don’t collect on a broken contract from a company in bankruptcy. And even if you do, it takes time, legal costs, and usually delivers pennies on the dollar. Worse, you lose any goodwill or future business you might have had. People in the industry remember, and they will take note the next time they are negotiating.

So instead of pushing the issue to the edge, I worked something out.

We structured a workaround: I still made a livable margin (enough to reflect the market move and protect my book), but gave them the flexibility they needed to avoid a total wipeout. We shortened delivery windows, allowed a portion to roll forward at adjusted values, and tweaked freight terms. It wasn’t charity as much as it was strategy.

A few years later, that company came back around. They were in better shape, and when it came time for new contracts, they remembered how I handled that situation. I wasn’t just a counterparty, I was someone who understood that business is a long game.

Risk Management Isn’t Just Math, it’s Judgment

Contracts serve as both protection and leverage and are tools that can help you defend your position or assert your rights when needed. What I learned from years trading grain, and what I now bring to my legal practice, is that risk is a constant. Whether you’re managing market exposure or growing a business, the question isn’t whether challenges will arise, it’s when, and how significant they’ll be.

So, if you’re building a company, here are a few hard-earned lessons you should consider:

1. Don’t mistake relationships for protection.

Good vibes don’t replace clear terms. Even great partners can face hard decisions. Contracts are how you protect both sides when the pressure is on (especially when the human players in the relationship can change). And for founders, anytime you’re raising capital, allocating ownership, or promising returns, it’s critical to do more than just document it, you need to get it right under the law. Following the applicable statutes and common law precedent isn’t just about compliance; it’s about protecting your investment. Risk is inevitable in business, and equity disputes, whether with counterparties, investors, co-founders, or employees, often arise when expectations aren’t aligned or enforceable. Clear, legally sound structuring from the outset is the most effective way to avoid litigation, promote transparency, and reduce the chances of internal or external conflict before it begins.

2. Know your industry’s governing rules and “culture.”

In grain, we had NGFA rules. In tech, it might be open-source licensing or SaaS subscription frameworks. Every industry has a “code” and if you’re not fluent in it, you’re exposed. Knowing this sort of “third” law helps build relationships within the business community you’re involved in—and helps you to avoid any disputes that might come from a bad interpretation of the “culture.”

3. Winning isn’t always the same as being right.

Litigation and arbitration take time and money. Sometimes the best legal decision is the one that preserves future opportunity, not just maximum extraction today.

In the end, the difference between success and failure can sometimes be the ability to manage uncertainty with clarity and humility. Just like in trading, you won’t always control the market, but you can control how you prepare for volatility and strategize to wade your way through risk.

And if you’re ever in a position where you’re technically right but strategically stuck, remember: broke counterparties can’t pay, and enemies don’t become customers.