For clarity’s sake, keep contracts simple

The construction industry is not known for the simplicity of its projects. And it certainly isn’t known for the simplicity of the documents which describe those projects – technical specifications and legal conditions are long, complex and hard to understand.

The recent Robin Rigg windfarm case provides a stark warning for anyone intent on holding tight to complexity in our contracts. The €26.25m dispute hinged the court interpreting a series of ‘diffuse’ contract documents.

Just because your contract is inelegant, clumsy or badly drafted, you can’t ditch it and start again. Someone, the judges, have to work out what it actually means.  As a tool to help you do business, a badly drafted contract is an utter failure…

Surely working out what you’ve signed up to is better done before – not after – you’ve carried out a project? Otherwise you might as well click ‘I agree to the terms and conditions’ knowing full well that you haven’t got the foggiest what those terms and conditions actually say. Yes, it’s a gamble but think of the time you’d save if you never read another contract again!

The windfarm contract was described, with a hint of criticism, as having multiple authors, containing loose wording, and including ambiguities and inconsistencies. The contractor accused the client of tucking away onerous provisions in technical requirements, rather than spelling them out clearly and simply in the contract conditions.

Simplicity could have helped the client to clearly describe what it expected by way of functionality and the contractor to know what the works had to do.

Instead of simplicity, the contract writers had added layer upon layer of quality standards, performance specifications and technical requirements with at least 8 different measures of quality. Those measures reflected inputs – professional manner and good industry practice – and outputs – meeting an international standard and having a design life of at least 20 years. Some were met, others not… a single functional standard, relating to design life, proved very costly indeed for the contractor.

The longer a contract is, the less likely any single person will read all the documents which together describe the parties’ agreement. Lawyers won’t read the project specification (too much technical jargon) and specialists won’t read the conditions (too much legal jargon).

For clarity’s sake, so you know what you are signing up to, we should keep contracts simple. But as our current standard forms are clocking in at 20,000+ words, whether we can or will is rather harder to answer.

Originally published in Construction Manager, October 2017

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