Contract Drafting, Communications & Risk
Many contracts remain unintelligible to anyone who is not a trained professional. Often this appears to be a deliberate strategy – let’s make reading and analysing this so hard that no one will want to do it. In many spheres – such as consumer contracts and on-line ‘click-through’ agreements – it seems to work.
In situations where no one really needs to understand what terms apply, this approach is not important – except to the extent that it sets a norm for standards of design and drafting and impacts overall perceptions of contracts. Research suggests that most normal people (i.e. not lawyers or contract managers) see little value in contracts, except for the purpose of securing against worst-case scenarios and as support for counting revenue. The fact they are difficult to understand is not perceived as a particular problem.
Yet anyone who manages contracts knows this is wrong – and increasingly, that it costs a lot of money. While many high volume agreements may have limited relevance, contracts contain a range of rights and obligations that should be easy to understand and where compliance is essential. Contracts that fail to operate as efficient and effective tools for communication add to the likelihood of expensive mistakes and oversights.
So this brings me to the key concern, which is that there is so little focus or training on the sort of design and drafting skills needed to support contracts that are fit for purpose. Despite the infrequency of litigation, they continue to be driven by theoretical concerns based on historic interpretations of language. This means that they are intelligible to judges and lawyers and unintelligible to most others. Yet while there is evidence that their unintelligibility costs money and causes risks, there is no evidence (that I am aware of) that says judges are unwilling to accept improvements in design and terminology. Indeed, increasingly the sources of judgment are via alternative dispute resolution and there is no requirement that arbitrators or mediators are legally trained. Decisions are based more and more on understanding intent than on the old common law principle of precise wording.
It is time for all those who are involved with drafting contracts to stand back and question why we are doing things the way we are and what negative consequences flow from it. Our documents should be clear, easy to understand, simple to interpret and implement. Sustaining approaches that undermine these principles may be good for job protection, but should not be a source of pride.