How to simplify your contracts

Assuming you all somewhere have a contract, agreement or set of T&C that are perhaps a little on the bloated side, where would you start with simplifying them?

6 steps to contract heaven

First, consider the purpose of your contract. Is it primarily to manage to transaction/project or to enforce legal rights/remedies? Work on the 80:20 rule that 80% of your content should support your contract’s primary purpose.

Second, ensure your contract is easy to create for each project by extracting all variable or project-specific information and place it either in an Annex or (preferably) in a Key Data page. This means you have your contract data ‘at a glance’ in one easy to fill-in section.

Third, carry out a contract-mapping process. Take all the current content that fits your purpose (see 1st step), and categorise it into meaningful headings. The first few clauses should deal with the most important elements like the parties’ responsibilities, time, cost and quality. You can also organise the information chronologically where relevant.

Fourth, focus on the intent of each clause, paragraph or section. What is it really trying to do? How does it change behaviours? Try and convey that meaning in the simplest way.

Fifth, ensure any obligations, responsibilities, duties and processes are expressed as a positive task. Instead of saying what the suppliers cannot do, say what they can do. Make any constraints objectively clear and easy to understand.

Sixth, remove all duplication with other contracting processes or documents such as on-boarding, codes of conduct, charters. If there are lots of policies or rules that all your suppliers have to comply with, consider creating a code of conduct that is easy to update outside your contractual framework.

What should you do?

Consider carefully if your existing contracts are easy to complete, understand and use. If not, simplify!

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