Why clear language makes for strong contracts
A tight contract requires precise and up-to-date knowledge of the law. But that’s not all.
When drafting a contract from scratch, it’s vital to have a strong command of language and grammar to clearly express every clause or stipulation.
This is for the benefit of you and your client: as this could prevent future litigation and will demonstrate your value to them.
We spend a lot of time worrying about putting the right references to the law in the contract and checking that we are not missing any key information.
However, we may forget how important it is to use the appropriate language.
Some of the common mistakes that people make in contracts are: commas in the wrong places, long and confusing phrases, or deliberately obscure clauses.
Language is crucial in contract drafting, although it can be undervalued or forgotten by lawyers.
This is the reason why we are facing an increase of legal disputes arising as a consequence of bad drafting as shown also by recent case law.
See, for example:
- MonSolar IQ Ltd v Woden Park Ltd  EWCA Civ 961
- Wood v Capita Insurance Services Ltd  UKSC 24
- First Personnel Services Ltd v Halfords Ltd  EWHC 3220 (Ch)
- Arnold v Britton  UKSC 36
In fact, the courts pay a lot of attention to grammar in contracts to determine the meaning of the document and to understand the parties’ intention as expressed in each clause.
What does a good contract look like?
Good contracts are underpinned by:
- a good understanding of each party’s position
- due diligence in evaluating the risks connected to the contract
- accurate research of the legislation, and
- robust negotiation to fully identify the parties’ mutual needs
But these elements can be a total waste of time and energy if, at the end, the clauses are not able to reflect these good principles.
We often come across ambiguous terms and conditions in contracts, which can cause serious legal consequences for clients and lead to protracted negotiations to agree a revised version of the terms.
It should be our duty to avoid loopholes and amend any improper use of the language in a contract in the best interests of clients.
Having experience in different legal jurisdictions and contracts in different languages, I know how common it is to overlook using defined terms and short provisions in a contract to reduce the risk of ambiguity.
Ultimately, it is not enough to be up to date on the current legislation. We must remember the importance of using effective language, correct grammar and punctuation.
A missing comma can change the entire meaning of a phrase, which could lead to losing a dispute if one or more clauses becomes critical and ambiguous.
Communicating to clients
Another important aspect to consider is to communicate with clients in a way that avoids using technical terms that they do not understand.
Like most in-house lawyers, I have had to learn to interact with different kinds of audiences and understand how to make legal concepts clear for them.
It is essential to know the balance between your duty to update the client on their case, and the risk of providing too much information that can only cause confusion, especially during a negotiation.
You should explain to clients how they can achieve their goals without risking significant legal consequences.
Clients do not need to understand the law to an expert level, but they must appreciate how a particular provision can impact their objectives and, therefore, what action they need to take.
They just want to know what needs to be done to conclude business and make it work.
They may not understand the importance of a positive negotiation, which can take longer than expected if you cannot guide them through the process and explain things clearly to them.
What is best practice for contract drafting?
The contract needs to mirror the parties’ intentions. Clients need to be satisfied that their interests and mutual obligations are clearly reflected and that they can easily rely on the terms and conditions within.
It’s fundamental that your client understands the amount of risk that they are undertaking and any potential liabilities.
Sometimes, together with the uncertainty of limitations of liability clauses, these can create the basis for future disputes. This is why clear communication and correct language are key points when dealing with clients and contracts.
But there is no way of securing this understanding if we fail to communicate with clients clearly and effectively.
What’s important to remember?
From my experience I can say that it doesn’t matter in which language you are drafting a contract or communicating with a client, you should follow the same principles.
It is important to be up to date on the legislation, but don’t forget about the importance of the different nuances and difficulties that the use of the language can create.
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