Why You Should Use Plain English Contracts
Contracts are like the rules of a sports game: they tell each team what it can and cannot do. They also tell us what happens if any of the rules get broken.
Just like how each member of a basketball team needs to understand the rules in order to play the game, each person signing a contract needs to be able to read and understand their contract.
The big problem is that most people rush into the “game” without understanding the rules. Why? The rules are often written in a foreign language and hiring a translator (i.e., lawyer) to understand them can be expensive and difficult.
And with contracts, there can be huge consequences for “playing the game” without understanding the rules. The words of a contract can give you rights or strip them away, which can cost you significant amount of money.
That’s why we’re a big advocate for plain English contracts. This blog post covers what they are and why you should consider switching over to them for your business.
What Contracts Are Like Now
Currently, nobody can understand contracts. Heck, even lawyers have a hard time understanding them! When asked, people associate “contracts” with being too long, too complicated, and too difficult to understand.
Most contracts are written in legalese: a language used by lawyers that is difficult for most people to understand. And the fact that most people don’t understand them doesn’t stop them from becoming legal and enforceable.
The terrible fact is that contracts are enforceable under law based on the assumption that each
person has read, fully understood and agreed to every clause.
So why do we continue to use legalese if it doesn’t serve most people? The most common reasons includes:
Habit + inertia. Writing plain English contracts is not easy. It may be easy on the eyes, but it often takes more effort, time and creativity. For both lawyers and non-lawyers, it’s more efficient in the short term to just use old legalese templates they don’t understand. And even if they create a plain English contract, some argue that it’ll take time to get familiar with the “new” way of doing things.
Fear of change. Many lawyers will argue that it’s safer to use “tried and tested” language where you know exactly how a court will interpret the legalese language. Otherwise, a court will need to interpret new language, which can be highly unpredictable. This is a weak argument. If it’s in plain English, courts will interpret them using the plain meaning of the language.
Protecting lawyers. Some take a more sinister view and say that lawyers want to protect their status as an expert and that is why they keep everything in a language that is foreign to everyone but them.
What Are Plain English Contracts
A contract in legalese requires you to find a lawyer or study to be one. It increases the risk of misrepresentation and misunderstanding, which translates to more lawsuits and disputes. And it burdens everyone – not only you and the other side, but also your lawyers and any judge who has to interpret the contract. That is why plain English contracts are the way to go.
What are plain English or plain language contracts? They are contracts that are easy to read and look like they are meant to be read. Their goal is clear which makes it a more effective communication.
It is important to note that a plain English contract does NOT mean it’s a “dumbed-down version” or written for those who are less intelligent. It is also not a simplified version of the English language.
A plain English contract is drafted to be user-friendly and direct.
Why You Should Switch Over to Plain English Contracts
There are amazing benefits with using plain English contracts for your business:
Plain English contracts are efficient.
As described in this article by General Electric’s general counsel, deals get negotiated and closed much faster (which means revenue coming through the door much faster). Plain English contracts save work for all users as it doesn’t require lawyers to understand the contract.
Plain English contracts improve business relationships.
Using plain English contracts that your clients and customers can easily understand will encourage them to trust you faster. It leaves no possibility of any lingering thoughts that there is something hidden in the small print. It will help identify and avoid potential misunderstandings, which avoids unnecessary costs.
Plain English contracts reduce risks of disputes and litigation.
In one study, researchers found that 25% of lawsuits were caused by issues with interpreting a contract. Plain English contracts can take away potential misinterpretations and make it much harder to argue that there were any surprises in the contract.
In summary, everyone should switch over to plain English contracts simply because it’s a good business decision. It’s not easy to change any status quo, but weighing pros and cons, plain English contracts are definitely worth the change.
Disclaimer: This article is for informational and educational purposes only, it is not legal advice. It does not create an attorney-client relationship between you and Lawgood, its founders, or the author. If you need legal advice, you should hire a lawyer.