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Red lines lead to red faces: EU Commission Versus AstraZeneca demonstrates the need for change

January 30, 2021

Opinion: Tim Cummins & Sally Guyer

Contracts provide frameworks for business relationships and, as we know, when the relationship is going badly, out comes the contract. That is when we have executives and politicians engaging in the unedifying spectacle of citing terms and conditions that they don’t fully understand and the people who wrote them are unable to explain …

It is helpful when contracts provide a practical operational guide, especially to assist when things are not going as expected. If they are designed and drafted with this purpose in mind, it enables business people – the non-lawyers who are the ones requesting the contract – to assess and validate its contents. They are the ones who should be affirming that an agreement reflects their intent and effectively addresses some of the ‘what ifs’ that could derail performance.

But of course, contracts are rarely like that. They are based on legal traditions that render them almost incomprehensible to those outside the profession (past research suggests 88% of business people find contracts ‘difficult or impossible’ to understand).

So, in spite of all the redlining that doubtless went on when finalising the agreement between the European Commission and AstraZeneca, the result appears to have been an ambiguous contract that is not ultimately going to help anyone resolve the immediate situation – a shortage of supply. All we do have is a lot of red faces. Whether the contract ultimately offers the Commission any effective recourse only time will tell – but in the meantime, we are seeing the rather unproductive spectacle of politicians selectively citing contract terms as part of a public relations exercise in blame avoidance.

We all know that contracts and contracting processes need to change, that they should become business assets and vehicles for communication rather than weapons. Once again, this life-and-death incident proves the point.

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One Comment
  1. Paula Doyle permalink

    You absolutely said it Tim and Sally. As you know, we at WorldCC are changing the look and feel of contracts, to the delight of all stakeholders. We are making them easier to read, easier to navigate and easier to understand! The icing on top, better contracts are proven to reduce negotiation cycle times and remove ambiguity.

    As a lawyer with more than 20 years experience, I constantly ask myself why contracts and how they are written have remained so wedded to past practices. Time for change!

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