At the 2023 World Commerce and Contracting Summit, Elizabeth de Stadler from Novcon said:
we should not lose sight of what we are actually here to do: which after all is to… help clients to form relationships and to define the rules of those relationships in a way that is clear and compelling to everybody, not just lawyers
It is a fallacy that a contract can prevent something from going wrong on a transaction or project – whatever the contract says, lawyers (litigators) will find ways around or between the words used to ‘massage’ the message, exploit ambiguities or uncertainties, or establish gaps.
The theory
How do contract writers and lawyers focus on creating better relationships between the parties to a contract?
- Consider the parties’ hopes for their commercial relationship and record that in the agreement
- Learn from other disciplines including risk management – explain how the parties can create opportunities and make sure the best things do happen
- Consider how your contract makes the users feel (research cognitive science) so our words can foster better relationships between the parties – as Elizabeth said ‘creating distance between them does nobody any favours‘
- Understand what drives both parties so you can tailor your why to their why and find the overlaps that create a win-win – this is known as tactical empathy.
In practice...
Sally Guyer (who was interviewing Elizabeth) said that ‘very often contracting professionals shy away from the fact that [contracting] is a relationship and that feels strange to them‘. She agreed that many organisations and World CC members embrace what is known as relational contracting. This requires the contract writers to create a better connection between the relationship and the contract, which – after all – have to operate seamlessly together.
It’s regrettably true that lawyers, tribunals and judges tend to focus on the law… but these outsiders are not the users… they’re not the people or organisations in the relationship. The job of contract writers is to facilitate that relationship – to make sure the parties get together and take obstacles out of their way.
One of those obstacles is the legal language – the contract is not (or should not be) for the lawyers, tribunal or judge. Contract professionals, contract writers and lawyers should all ‘write in hope that a judge never reads the contract’ (as Elizabeth said).
What should you do?
For anyone preparing or negotiating a contract, focus on writing solely for the parties – the ones actually building and sustaining the commercial relationship.
For anyone else, ensure your internal structures and reward systems are consistent with working relationally (regrettably current World CC research shows most people believe the opposite… booo).
Related posts: relational contracting, what does cooperation mean and good faith
