Over the years, contracts have evolved from being just a handshake to include clauses, documents, and uncompromising terms. Now, it stands as an official record of the agreement between two or more parties. It underlines the terms of the agreement and can be referred to in case of any dispute. But are business contracts today being written only to refer to when there is a disagreement?
Contracts define the nitty-gritty of business activities and can be used for running a project successfully. So why are they not readily used for facilitating work instead?
Structured with technical jargon, it is difficult to read and comprehend the outcomes in a contract. Lack of user-friendliness causes a problem which leads to contracts remaining unread or misunderstood. A survey conducted by IACCM shows that only 1 of 10 people agreed that contracts are easy to understand and just 17% are satisfied with the agreement process. These statistics call for an urgency to simplify contracts so that it can be used easily, from tracking contractual obligations to understanding payment terms.
So, here’s what makes a contract easier to read and interpret
- Readable Contracts
- Simple to Understand
- Visually Appealing
There are discussions making rounds about creating contracts that are readable and more user-friendly. But what does that even mean? Are contracts supposed to be user-friendly in the first place?
Well, going by the current scenarios, contracts are created by just keeping in mind the lawyers and court, even though they are the secondary users. Contract creation shouldn’t be done with this view, rather it should be designed to respond to the needs of immediate users. They should –
- Be easy to understand
- Be simple to execute
- Facilitate in meeting the project milestones.
The enthusiasm is not merely because one believes that service providers should focus on their user, it is also because it reduces risk. User-friendly contracts will have a higher adaptability rate and will be used beyond legal battles. It will ensure more use of a contract to support implementation and performance, meeting deliverables, understanding clauses, etc.
It’s said “ Simplicity is the ultimate sophistication” or as we put it “Simplicity is the ultimate solution”
Contracts today are long, complex, and full of information that is unnecessary and incomprehensible. They are business documents intended for communication to reconcile different parties’ expectation and therefore should be understandable to the relevant audience. On the contrary, they are difficult to comprehend and thus increases the risk of misinterpretation.
Over the years, contracts have become more pervasive due to the increasingly litigious society. The need for simplified contracts is now more than ever. It should incorporate the following aspects into consideration –
- Bring Contract Clarity
- Using Next-generation contract
Contracts by their nature cannot be ambiguous and need to be precise. They are critical documents that convey serious consequences but that doesn’t call for it being presented in an obscure manner. The requirement from anyone drafting an agreement should be that it can be used without reluctance.
“The law does not force contracts to be the way they are – old habits and tested templates do ”
This is the most creative area that the contracts have recently ventured into. Who would have thought that contracts can actually be creative? Visual appeal is always sought after and companies like Shell have started using it in their contracts. It catches the attention of the reader and is at times self-explanatory, as in it does not require text to support it.
Incorporating the visuals into text-heavy contracts makes it interesting to read and can be easier to piece together. The representation can be in different ways –
- Data Descriptive Visual Aid
- Communication through icons, emojis, etc.
There are people who are averse to such inclusions and doubt that inaccuracies might creep in and cause confusion. However, graphics simplifies and condenses data and presents it in a more appealing way. This also helps to pique the interest of the reader!
Simplifying a contract is not an easy task and there is no one way to go about it. It depends on the size of the organization, management style, attitude towards risk and the degree of transformation needed.
Contract simplification at the most primary level can be the use of plain language and simple design to an existing document, the tone of conveying the information, etc. It can also be the layout or the architecture of the contract, the easy way in which it is communicated by reorganizing the keywords, creating summaries, or providing the users with visual cues to help them find the information that they need.
Do you think contract simplification is the need of the hour? How would you try and simplify a contract for better understanding and execution? You can talk to us and share your thoughts!