Get More TLC: #14: A rant

You know me… I love a good rant about contracts. Not just because they drain your time, energy and money, but largely because of the adverse impact on you of bad contracts.

A lady (Sarah Fox) with her hands clamped to her head. She wears a purple jumber and purple-rimmed glasses. On her wrist is a Mondaine watch with red leather strap. She is smiling through gritted teeth. By Sarah Fox

Too Long and Complex

A wide variety of global corporates are creating simpler contracts – to speed up transactions and to enable them to do business with SMEs. Many start-ups, innovators and niche specialists simply cannot afford the time/energy/money to review long complex contracts. That’s why World Commerce and Contracting asked me to draft a simple universal unbiased set of T&C for goods.

An employer spent millions of pounds of money which was not theirs. Construction projects typically involve retention which is not paid to the contractor until 12 months after completion. However, it is the contractor’s money. No-one had understood the contract (it was over 150 pages long) and no-one had put in place the internal procedures to ring-fence that money. When the requests for that money came in, they were in big trouble.

A member of staff at a large contractor didn’t really understand letters of intent so sent long copy & paste contracts, attaching the draft building contract to the back… ending up with a mongrel contract that suited no-one and was even more long and complex than the intended building contract.

I know that contracts are not sexy, or exciting and it is often not easy to see the link between a bad contract and impact on your profitability. But I also know that because of their simpler contracts:

  • a trade association has doubled the number of contract downloads, and their builder members can explain the contract to their clients easily
  • an architect practice massively reduced the resources to prepare and agree contracts – time, energy and money they can invest in resolving issues when they do arise
  • a small builder has improved their negotiating position because they can point to clear wording in their simple contract (rather than bamboozle their client/supplier with jargon which requires a lawyer to interpret)
  • an engineer consultant has enhanced trust because they can ask the right questions at the right time
  • an SME become more profitable, as their clients know exactly what is included and excluded from their scope, and they can clearly charge for ‘extras’
  • an specialist subcontractor has total confidence and pride in their contracts – which also safeguard their business
  • a family building company has eliminated objections from clients and suppliers.