In Stefania Passera’s doctoral dissertation “Beyond the wall of contract text” she cites research that has shown that:
- Clear and implementable contract terms are crucial in building successful [business] relationships
- Well-structured and well-developed agreements foster better relations
- Long-term successful relationships require strengthened terms on communication, role clarification and mutual expectations
- The framing of clauses affects levels of trust between parties.
Most modern contracts are drafted reactively, to safeguard the interests of the parties if a dispute came to court. But proactive and preventive law views contracts differently, not simply as business documents delegated to lawyers, who in turn create dispute-centred legal tools. A proactive and preventive approach includes:
- Parties viewing contracts as managerial-legal tools, based primarily on business, maximizing managerial functions and focusing on the end-users of the contract tool
- Contract design as a multi-disciplinary endeavour covering technicians, lawyers, financiers, risk managers, contract managers and project managers
- Treating information clarity, concision and actionability with the same importance as legal enforceability and precision
- “[T]aking full advantage of the principle of freedom of contract” to adopt content, style and visual formats ‘whenever useful for explanatory and disambiguation purposes.’
The advantage is not just the ‘success’ noted above. But also a cost reduction during the contracting lifecycle as it costs less to avoid getting into trouble as it does to get out of trouble.
Contract are puzzles where legal terms (describing ‘what if something goes wrong?’) are just one piece along with technical (‘what solution is being sold?’), and financial terms (‘who pays whom, when, where, how and why?’), which need to be coordinated through strategy, communication and good information architecture
In this approach contracts are readable roadmaps of how to proceed and succeed. Do your contracts help you to know how to proceed and are they designed to ensure your project will succeed?