If you’re reading this, you’re probably familiar with lots of the accusations thrown at contracts:
- they’re too long;
- they’re too complicated;
- they’re too one-sided.
And so on.
Inevitably then, you’ll regularly hear that contracts should be made shorter, more relevant and more balanced. Cheers to all that (it’s what I do for a living after all).
In practice, these aspirations can sometimes pull in different directions, so you may find yourself having to balance competing aims if you’re trying to achieve them all.
Short versus Fair
Perhaps the most obvious tension is between short and fair. Most lawyers know that one of the quickest ways to shorten a set of contract terms — aside from making the font-size smaller(!) — is to make them one-sided. That tends to play out in a couple of ways. One is to remove anything that might favour the other party. The other is to reduce some topics to short, blanket statements that are probably unfair, but easier to state briefly.
To pick a slightly arbitrary example: customer audit rights. A supplier might decide not to address this topic at all in their standard sales contracts, even though they know it’s a common and sensible request from customers in their market. This might save a few paragraphs.
On the other side of the fence, a customer, in an attempt to keep their standard procurement contract short, might deal with this issue by including a succinct but sweeping statement that gives them very broad audit rights, omitting all the reasonable caveats and conditions you might typically expect to see. In both cases, if you’re intent on oiling the wheels of negotiation and achieving a balanced outcome, the practical position is probably going to be a longer clause.
Short versus Relevant
Closing a deal is generally made more difficult if the contract includes content that isn’t relevant or appropriate. It will naturally trigger questions and points for negotiation.
This can be a particular challenge where customers insist on using their own standard procurement contracts[i]. Many organisations will try to craft a one-size-fits-all contract for buying all sorts of services, goods and technology. On some levels this makes sense, especially for large, regulated businesses. It’s one way of making sure that most of their contracts meet minimum commercial and compliance standards without having to reinvent the wheel for individual deals. It may also limit the number of contract templates they need to create and maintain. But…
Creating one-size-fits-all contracts is hard (if not impossible) to do well without making trade-offs. Again, these tend to reveal themselves in different ways. One is for standard contracts to become quite biased towards a particular category of products or services in practice, even if the original aim was for it to be multi-purpose. This can happen because, consciously or not, each time we reach a topic that might warrant different approaches, it’s common to pick a lane to avoid complexity. But that makes the contract less suitable for the scenarios that don’t fit that lane.
The opposite tendency is to try and cover lots of bases by including content for a range of different scenarios. As well as making the contract much longer, this will often put the onus on the reader to decipher what’s relevant to them. Organisations that take this approach typically hope that the other party will take a ‘pragmatic’ view and ignore what may not be applicable (even if the contract doesn’t actually spell this out). But of course, even if the other party does play ball, they will still have had to wade through lots of irrelevant content to reach that conclusion.
All this shows that making a contract template more relevant doesn’t have a straight forward relationship with how long it is. And that’s because there’s different ways in which a contract can fail to be relevant. One is to exclude content that should be there. Another is to include irrelevant content that needn’t be. Both are sub-optimal. And both can be unfair on the other party, which brings us to…
Fair versus Relevant
Even if everything in a contract is highly relevant, the content may still be one-sided. In that sense, relevance is obviously no guarantee of balance.
On the other hand, a contract that isn’t very relevant will always, to some degree, create an unfairness for those that have to use it. That might be because the content simply isn’t appropriate. But more broadly, where a party insists on using an unsuitable contract, it will also draw others into a contract process that’s more complex and time consuming than it needs to be, which itself is unfair – particularly if it forces the other side to either make the contract more relevant themselves, or turn a blind eye to what it actually says.
Another issue here, is that relevance isn’t just a binary question of whether content is in or out. Some content will be more relevant than others; either because it’s especially relevant to a particular user group, or because it’s just more significant overall. In this respect, relevance is also about prioritising. And for anyone involved in creating standard contracts, that raises questions like: ‘does this contract do a fair job of focussing on what’s relevant for both parties (not just my own)?’.
On the whole, fairness and relevance should pull in the same direction; particularly as fairness can be a helpful lens through which to consider whether something is relevant enough to include (and if so, how). And in all this, there will always be balances to be struck; some of which might call for content to be added, some for content to be removed, and some for content to be moved.
So what?
There’s probably plenty of work to be done to make contracts shorter, fairer and more relevant before we need worry too much about how these aims can occasional butt up against each other. In some quarters, that includes championing the idea that those aims are worth investing in at all. But, once you start trying to optimise contracts, you’ll never be too far away from having to balance some competing aims and outcomes.
We often do this intuitively and, to some extent, subconsciously. Where trade-offs are discussed, it may be framed in the language of ‘risks’, ‘priorities’ and ‘efficiencies’. But in my experience, the best route through those issues can be found by considering questions of fairness, relevance and brevity first; not least because they come with a stronger sense that there’s always another party to consider when dealing with contracts.
As always, none of this is to suggest that there’s easy or right answers. The opposite, in fact. Which is why it can be particularly helpful to acknowledge and discuss these kind of trade-offs openly.
The importance of being concise
A final thought. For all this talk of trade-offs, there’s one thing that will always help with making contracts shorter, fairer and more relevant. That is, writing what you need to say clearly and concisely, following plain language principles.
Very often, long and complex contracts are a result of verbosity and poor design, rather than the underlying points being made. The great benefit of writing concisely is that it allows you to make the same points with fewer words – which is also, incidentally, why making a contract shorter is rarely the same thing as making it riskier (if done right).
In fact, being concise frees up space to cover more issues if necessary. In this respect, it offers greater flexibility for anyone trying to find the optimum balance of what goes in, what stays out and what goes where[ii].
Lots of this comes down to the fact that writing concisely requires a clarity of thought that goes hand-in-hand with carefully planning what it is you need to say in the first place. And as a result, how you write will also impact what you write.
That’s true for all types of writing, but is, I think, particularly important for standard contract templates that are destined to be read, adapted and negotiated by others after the event. Where that’s the case, the ultimate decision on what ends up in each contract will be (or should be) based on what multiple parties need or want, not the original author. But making those decisions is made so much easier if the author has carefully thought about how to write what’s used as the starting point. Or, to bring it back to the theme of this blog post, by creating contract content that is clear and concise, you will always makes it easier for you and others to decide:
- is it relevant;
- is it fair; and
- is it necessary?
[i] It can also be an issue where companies that sell lots of products and services create massively long and complex sales contracts to cover many at once.
[ii] Plain language is also a great enabler of other benefits that help achieve the right balance of content. For example, if you write in short sentences, distinct paragraphs and clear headings, it becomes much easier to prioritise how content is ordered and presented to readers. Not only that, it’s a huge help if you’re wanting to use technology to generate and tailor contracts for different use cases, which is one way of creating contracts that are more relevant to the job in hand (easing the one-size-fits-all problem).