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Rethinking Traditional Contracts

    

There are many ways to define and describe contracts. In addition to the usual words associated with contracts, like verbose, confusing, and binding, the thought of them also conjures up all sorts of imagery. For many people, the idea of contracts likely evokes images of stacks of paperwork, arguing lawyers, wood-paneled courtrooms, and black-robed judges, among numerous other possibilities.

But, there is also an emerging view of contracts, due to an ever-growing demand, that many people wouldn’t necessarily expect and might even be surprised to learn. Specifically, there is an increasing desire and push for contracts to evolve. In fact, the nature of contracts is going to have to change in order for them to survive, and the changes must be drastic. As one industry professional put it, contract drafters are “increasingly exploring new approaches in contract design.

 

The reason this contractual overhaul is finally surfacing derives from the reality of doing business nowadays. The business world already moves at a fast pace, and it is always striving to increase the speed. Companies want to close deals, and they want to do it quickly. However, when contracts are thrown into the mix, they can slow down the entire process and sometimes even halt it altogether. This is due, in large part, to the fact that contracts have become so complicated. 

 

The whole contracting process normally requires counsel for each party to haggle over every nitty-gritty detail, all with the goal of avoiding or assigning blame in the event of discord. Conversely, a clear and concise contract would more than likely preclude a lot of the issues the parties spend so much time agonizing over. Here are three easy ways to avoid the pain of traditional contracts:

Simplify

Less is more. When it comes to contracts, the importance of this notion could not be truer. We have gotten so accustomed to reading voluminous documents that we are supposed to sign to indicate we understand and agree to the terms contained within them, but the truth is, most of us probably don’t really read, and certainly don’t absorb, over half of what is in there. This unnecessary complexity and the inevitable surprises that arise are precisely what end up causing problems. If we keep things short and to the point, so much hassle could be avoided.

Clarify

Okay, so in some instances less cannot be more, and more is simply required. Under these circumstances, everyone needs to be on the same page. And that goes for every single page of a contract. Vague words need to be defined, and even not so vague words probably need to be defined. Nebulousness does not belong in contracts, but clarity and conciseness do. Whenever there is even the slightest doubt as to the meaning or expectation behind something, it should be clarified immediately. It is far too risky to make assumptions or adopt a wait-and-see approach to contract interpretation and performance.

Compromise

All relationships, whether personal or professional, depend on each party’s ability to compromise. Companies may be different, and people may be different, but smart leaders know how to reconcile those differences for the collective good. To be successful, people must be able to empathize and compromise. Business contracts, in particular, require a lot of give and take. And, there must be a fair balance so that both parties stand to gain. In far too many cases, one party to a contract seeks to gain more than they are willing to give, which, of course, leads to contract disputes. But, companies that adhere to the principle of good faith and fair dealing ultimately prevail.

 

Contracts don’t need to be as complicated and onerous as we have made them. These days, more and more companies are rejecting outdated approaches to conducting business, such as using traditional contracts that have become far too taxing. As companies and the business industry continue to evolve, contracts must evolve along with them.

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