How a move toward layman’s English is changing the face of contracting (and how you can benefit)
Complexity is out and simplicity is in. It’s time to throw away those old confusing contracts and replace them with everyday English ones that can save your firm shocking amounts of time and money.
How many times have you signed something without reading it, or maybe you read it, but did you understand it? It makes me shiver just thinking about it. I can hear my father’s voice as if he’s standing behind me: “never ever sign your name without reading something first; you could be signing away your first born!” I promised him I’d listen, but I once heard about someone setting out to read the terms and conditions on their phone. I think they’re still working on it.
We all know contracts aren’t ideal forms of communication. It’s why we don’t use them to make dinner plans. “But they’re there to protect our interests” you say. “It’s a necessary evil to make sure agreements are honored”. But is it all really that necessary? When did your high school English teacher tell you “forthwith” and “heretofore” were pillars of our language? Where does it say pages upon pages of redundant recitals and definitions is effective written communication? Never and nowhere, and it’s got to stop!
Introducing the plain language contract; it’s a legally binding contract that anyone can read — hold for applause. After an article written by Shawn Burton in last year’s January issue of Harvard Business Review on the topic, the business world has been abuzz with the idea and the implications of this paradigm shift. Given the effect it can have on the future of business as a whole — especially the public procurement industry — we’ve decided to break down this trend for you, because we’ve also seen a movement towards plain language contracts in the public sector.
In this blog, we’ll be looking at the
of plain language contracts, so you have the resources to keep up. Now, in plain English, let’s get to it!
It’s clear from the name, but a plain language contract is a contract that uses plain language. If a high school senior can’t figure it out, it isn’t going to cut it. Words like “indemnification”, “ex parte” and “res judicata” are absolutely off the table. There isn’t a 10 page index of definitions because we aren’t going to use words both parties don’t know. No redundancy, no needless complexity, as John Wayne said in Wings of Eagles, “let’s have it straight, doc.”
This isn’t a new idea by any means. In fact, President Nixon of all people started the trend in the US government in the ’70s when he ordered that layman’s terms be used in the federal register. It’s even a law now. In 2010, President Obama signed the Plain Language Act “to enhance citizen access to Government information and services by establishing that Government documents issued to the public must be written clearly.” The idea is this: we’re trying to get a point across, not strike fear into the hearts of men, we don’t need the brain scrambling jargon.
Until now, businesses — especially those in public procurement who deal with contracts seemingly constantly — have been wasting untold time and money drafting impossible clauses and redundant documents with the hope that it’ll secure their interests and insure agreements are kept. On the other side we’ve been wasting even more times trying to figure out when these documents are even saying. But the fact is, this isn’t all necessary. In the HBR article, Burton, legal counsel for GE Aviation, gives a beautiful example of the kind of decluttering that is possible without sacrificing safety.
Customer shall indemnify, defend, and hold Company harmless from any and all claims, suits, actions, liabilities, damages and costs, including reasonable attorneys’ fees and court costs, incurred by Company arising from or based upon (a) any actual or alleged infringement of any United States patents, copyright, or other intellectual property right of a third party, attributable to Customer’s use of the licensed System with other software, hardware or configuration not either provided by Company or specified in Exhibit D.3, (b) any data, information, technology, system or other Confidential Information disclosed or made available by Customer to Company under this Agreement, (c) the use, operation, maintenance, repair, safety, regulatory compliance or performance of any aircraft owned, leased, operated, or maintained by Customer of (d) any use, by Customer or by a third party to whom Customer has provided the information, of Customer’s Flight Data, the System, or information generated by the System.
If an arbitrator finds that this contract was breached and losses were suffered because of that breach, the breaching party will compensate the non-breaching party for such losses or provide the remedies specified in Section 8 if Section 8 is breached.
Look at that! One sentence! And your eyes didn’t roll to the back of your head! The best part: it’s just as effective language. This single sentence will still protect GE Aviation in the event of a breach of contract, it just took much less time to figure out. That’s something I’d be willing and happy to sign.
A photo of the original GE Aviation contract beside Burton’s new plain language contract taken from the GE Report. The first draft of the contract was only 5 pages long
The question now is: Why do this? So we made contracts less scary, congrats. What does this mean for industry?
For starters, it can mean more money. In the GE Report, Kristin Kloberdanz highlights the effects of Burton’s plain language contract, and the biggest impact: customer negotiation times are down 60%. That’s not a typo; because the contract was simply easier to read, there’s less red lining, less arbitration, less negotiation, just signing. The time and money wasted on negotiation long form, jargon infested contracts was cut in half. In the modern economy and the fast paced market of public procurement that’s time and money that can save a firm.
This isn’t a small movement, either. Burton isn’t the first lawyer to try this. There’s even an entire international society of lawyers dedicated to the idea of plain language. Clarity International was started in the UK and now has partner lawyers representing over 30 countries from all across the globe. They host annual conferences around the world, and in 2016 they hosted one in New Zealand that focused on the effects of plain language on business. It was at this event that a presentation was given by Mark Biss on Quantifying the Cost of Confusion. It seems obvious, but businesses are wasting exponential capital on funding wasted time due to confusion. It’s a real problem facing a lot of businesses that can be cleared up so simply.
Start drafting your new plain language contracts using some of the resources below. It’s going to take some getting used to but it’s going to be worth it in the long run.
Now that you understand what plain language contracts are and why you need to be on this trend yesterday, it’s time to look at how you can get started. There are a number of fantastic resources you can use to get a better understanding of how plain language contracts can be drafted and what kind of movement you’re going to be a part of. Like we mentioned before, Clarity International holds annual conferences and events where plain language advocates meet to discuss ideas and trends. They also have a resource page that anyone can access and get started with that’s broken down by country.
Even the US government has helpful resources. In collaboration with the Office of the Federal Register and the Records Administration, the National Archives has released a guide to the principles of clear writing that are so straight forward and useful your high school English student should probably use it to study for their next exam. There’s also checklists and handouts from PlainLanguage.Gov, which offers guidelines, training and examples of effective plain language writing that can be a great resource for your contracting firm.
Overall, it’s important to remember that Rome wasn’t built in a day and neither will your plain language contract strategy. Be patient with your legal team, make sure they have the time and resources to learn about the products or services your firm is offering and the potential risks involved so they can clearly offer them and protect you in your new plain language contract. Also remember that the law has been laden with jargon for hundreds of years, it’s going to be difficult at first to switch that around on the spot. It’s going to take time and creativity to start drafting these contracts, but it’s worth it when it comes time to negotiate and sign.
For a deeper dive into the language and definitions used in the Federal Acquisition Regulation, check out this recent webinar we did with JSchaus & Associates.