The value of making contracts easy to read and follow

“A good contract can go in the bottom draw and never be looked at again” was what people said when I started as a lawyer in the 1990s. Contracts were seen as legal documents to be written by lawyers, negotiated by lawyers, and read by other lawyers - if there was a dispute. 

Now it’s widely accepted that contracts are not for lawyers – they are for the people trying to work together to get things done and create value. They should be clear, easy to read and understand, and focused on intended outcomes. 

There are some implications from this:

• Forget the master-servant relationship and only describing the obligations of the supplier. If there are things the customer needs to do, which the supplier will depend on, include these clearly too.  

• Don’t fall back on legalese to fudge things or make it hard for parties to work out where key risks or obligations fall. Law firms worry too much about their client getting sued. The risk of that is low – hardly anybody gets sued, particularly when the contract delivers the expected outcomes or parties can see issues before they become big problems and do something practical about them.  The risk of the contract failing to deliver the expected value is much greater and likely to be more expensive. Keep things simple - less is more. 

If your contract can be easily read and understood, it will reduce negotiation time and cost. It will ensure issues are identified and avoided before they become problems that lawyers need to solve. It will give you a much greater likelihood of achieving what you want from the relationship. 

Its also a lot easier to automate a contract that has been written clearly.  If you're interested in automating your contracts, but don't have everything lined up in terms of budget and approvals, getting the content right is a great investment of time.  You can also work on the formatting too, as covered in this post.