Have you ever read through a commercial contract and been frustrated because you don’t understand what it means? You are not on your own. At Harper James, our commercial solicitors are committed to banning unnecessary legalese. Commercial contracts are written in plain English.
In this article we look at the use of plain English in commercial contracts and how clear contracting can benefit your business.
Contents:
Why don’t lawyers use plain English in commercial contracts?
If you ask UK business owners why their commercial lawyers use complex legalese in commercial contracts you get a variety of explanations, such as:
- To justify the legal costs
- To increase the likelihood of commercial contract disputes and commercial litigation. It is easier to fall out if a document is ambiguous and we know lawyers love to litigate
- To make the lawyer seem clever – though cleverness is not all it appears as most solicitors have not set up their own business or designed or brought a new product to market
- Laziness – it is easier to use an old document rather than write a new commercial contract using plain English
The list seems like lawyer bashing – we know all the jokes about how many lawyers it takes to change a light bulb, and how many more are needed to litigate the result.
There is a move towards plain English in commercial contracts and consumer agreements but momentum is needed. That’s only likely to occur if businesses tell their commercial lawyers to write contracts using plain English.
Why not contract over the phone or by email?
Taking plain English to the extreme, why not contract by phone or email? That normally cuts out all the legalese but commercial lawyers warn that it can create problems, such as:
- Disputes over whether a contract exists – a phone call or email exchange may or may not amount to a binding contract. If you are the one who has acted to your detriment because you believed the emails created a contract, you can ask the court to decide if there is a contractual relationship or not. That’s expensive and time consuming. We cover this in more detail in our article on whether emails are enforceable contracts.
- Arguments over the precise terms – the email may agree that the seller will deliver but it may be silent on how delivery will occur and the timescale. That level of detail can be crucial if you are buying fresh produce or time sensitive goods
- Silence on key points – an email exchange is unlikely to go into detail, such as the mechanism for agreeing price rises or trigger points for the termination of the contract. Asking the court to imply terms is one option but that involves court proceedings, delay and expense
- Dispute resolution or commercial litigation- when things are either omitted or are ambiguous you have the option of using dispute resolution or commercial litigation to resolve a dispute. Results are never guaranteed and that’s why it is best to negotiate exactly what you want in the contract rather than risk the outcome of dispute resolution or commercial court proceedings
If you have questions on commercial contracting by email or contract disputes contact us to see how we can help.
The benefits of plain English in commercial contracts
The basic problem is that lawyers tend to talk, write and think like lawyers and they are not challenged to change their ways. Plain English in commercial contracts tries to:
- Balance the need for a short and snappy contract that everyone understands whilst covering all the angles, however remote. Take the example of Brexit or the war in Ukraine. Many would not have foreseen those events or their economic consequences but that is where a detailed contract can pay dividends with provision for force majeure or contract review or termination. Use of schedules can make a long contract more user friendly
- Be easy on the eye whilst also using tried and tested wording. If standard contract wording is included, however incomprehensible to the average reader, it can deter commercial contract dispute litigation if the point has already been litigated using that precise wording.
- Speed up negotiations as what is on offer and amendments are clearer so taking instructions is quicker. It is easier for the other party to say yes if they understand what you are offering. Reducing contract negotiation time is a big bonus for most businesses and enables you to focus on implementing the contract
- Boost your brand and improve business relationships – clear terms provide transparency and help increase trust across your commercial relationships be that with suppliers or customers.
- Help with the contract life cycle and review process – if a contract is worded clearly, it is easier to manage it and to spot breaches or to call for a contract review
You may be questioning ‘what the benefit is of using plain English in commercial contracts for the lawyers?’ That’s a fair question. At Harper James, we have found working with SMEs or in-house legal teams to create legalese free commercial contracts and consumer agreements helps builds trust and makes us the ‘go to’ business lawyers. Take a look at one client story of how clients and Harper James can reap the benefits of plain speaking and contracting.
Reviewing your commercial contracts
Whether you are asking our commercial lawyers to review the bones of a contract that you or your in-house legal team have prepared, or you are getting our team to revamp an old contract as part of your contact life cycle management process, you are likely to find our solicitors give you ‘optional extras’. These are to cover matters that you have not considered in your negotiations and, if included in the contract, the extra clauses could save your business time and money in the future.
For example, it isn’t strictly necessary to have a clause about price increase formulas or detailed trigger points for the termination of the contract. Getting rid of the superfluous keeps the contract short but that isn’t necessarily in your best interests. You may want to include a provision that you can terminate on notice to the other party, even if they are not in breach of contract or you might, with price rises and inflation, want to include detailed price rise formulas to protect your profit margins.
Covering the ‘what ifs’ increases the length of the contract but provided the ‘what ifs and extras’ are written in plain English there is a balance to be struck between a short contract and a medium length contract that offers your business additional safeguards and reduces litigation risk. It is a balancing exercise our lawyers undertake every day and we like to think that with client input we get the balance of plain English and speed of negotiation with comprehensive sector specific contract coverage right.
If you want to know more about contract management read our article Contract lifecycle management: what you should be doing
