Contracts are the lifeblood of business. We’ve been using them for millennia, so why should your business follow the global trend and focus on making them simple?
Contracts should:
- effectively communicate what each company involved in the project needs to do (allocating responsibilities)
- reflect the changing needs of the parties and the project by being ‘living’ documents
- be understood by all the stakeholders
- not be shoved in a drawer!
Hand on your heart, do your contracts do this?
Public procurement (as recently recognised by the UK Government in its Construction Playbook) should be transparent, open and competitive. It should centre on the needs of the users, be driven by data and provide real social value. Simple contracts in public procurement will lead to better joint delivery and collaboration.
The more stakeholders who understand the legal, operational, commercial and technical bases of a project, the more transparency there will be. It’s madness to think that the legal profession should exclusively ‘hold the pen’ on determining how companies do business, through their near monopoly on writing and understanding contracts.
Simple contracts in public procurement will also create a more inclusive tendering process for SMEs and micro-enterprises (of which there are 350,000 in UK construction). If a contract in a tender document requires a lawyer to interpret it, then it is exclusionary. If the risk profile is not clear, then you may get lower tender prices but at what eventual cost? Insolvency? Walking away? Gaming other provisions?
It’s clear that when all stakeholders know what’s in a contract, there are less likely to be disputes due to misunderstandings or missed expectations.
What should you do?
If you want to simplify your contracts then form a cross-disciplinary team who can take a strategic approach to key project issues. Many contract revisions require buy-in across departments to ensure the end result is truly user-centred, as well as frequent iterations as the new revisions are tested in use.
And if you need help with facilitating that project, get experts in: legal simplifiers, visual experts, information designers, risk managers and so on. It takes a village to create a 500-word contract!
