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Corporate Law DepartmentsThe newsletter of the ISBA’s Corporate Law Departments Section

August 2012, vol. 50, no. 1

Writing agreements clients can understand

The other day I reviewed a contract that was written so poorly that I could not tell which party was identified when I saw the first or second-person pronouns. I think I sighed visibly when I saw the block-text, ten-line paragraphs, and no road maps to distinguish the sections. I concluded that the contract was written this way for one of two reasons: 1) the other party wanted to discourage the smaller party from reading it before signing which is a common, calculated approached; or 2) it really was a terrible contract. Based on the bad grammar and run-on sentences I determined the latter was the case.

Despite the arcane way that most lawyers learn to write contracts—by studying poorly written ones that find themselves in law school text books—they are getting better slowly. Indeed, my favorite part of being an attorney is writing agreements that clients can understand. When written well they improve business relationships and control future problems. The following strategies are the ones that I find are most helpful.

Strategy 1: Ensure That The Contract Is Aesthetically Appealing To The Reader’s Eyes

Contracts need curvy paragraphs, bolded sentences, and spicy indentations. The best way to do this is to start with point headings. They break up documents so that the reader can digest them in small portions. Expertly crafted point headings serve as lamps along a hallway giving light to each section in the contract. More importantly, point headings in contracts lead the author to write focused sections. In the end, they produce different contours on the face of the contract permitting a reader’s eyes scan it and know immediately that it will not be drawn into too much at once.

Strategy 2: Explain The Contract Terms As Though You Are Teaching A Child

Contract clauses are important. They have specific functions which often materially affect transactions and any resulting problems. When the clauses are written more clearly, especially for non-lawyers, there is less room for confusion. These are the potential jury questions. The problem is that few non-lawyers understand the importance of these clauses or how they affect a business.

When I helped build an organization I gained a dramatically different understanding of ‘confidential and proprietary information’ now it was the sweat of my brow. So when it was leaked to a competitor I wrote the restriction differently:

As a member you will receive materials which this organization works hard to create. These are confidential and proprietary. That means this organization owns all the materials that it sends to you and can restrict your ability to use them or profit from them. This is important to understand. This organization has a compelling reason to protect the good will that surrounds it and the materials which it attracts.

Needless to say, our clients then understood what we meant when we said that they could not ‘copy, distribute, or reproduce’ our ‘confidential and proprietary information.’ This is the balance between using contract clauses that a court knows and interprets in a certain way but written so that non-lawyers comprehend it.

Strategy 3: Write The Contract With Simple Sentences

Contracts are scarred by ten-lined paragraphs and semi-colons that come from outer space. The crash landing is obvious when they do not follow an independent clause. This happens with many other punctuation marks, too.

Grammar is the first way the meaning of a document is controlled. Strong contracts begin with well written sentences. The shorter they are the stronger they are. Longer sentences are confusing to deconstruct. They also run a higher risk of improperly employed punctuation marks which can permanently alter the meaning of a sentence.

Well structured contract clauses begin with a short sentence that identifies what the clause does: “Waiver of one clause in this contract is not a waiver of any other.” The next sentence should define the ramifications of the first especially when dealing with more complex contract clauses. But now a reader does not have to pilfer through improperly used commas to determine the meaning of a critical contract clause.

For example, one of the first organizations that I helped build had about five people all working in different directions. This is how small businesses grow. It is also how problems breed. The contract, therefore, with the clients needed a merger clause so strong that a client could not allege later that it was told something else during the relationship. I wrote it as follows:

This agreement represents all the terms by which you and ____ are bound. This is important for you. It means that you must not rely on information about the rules if it is not included in or conflicts with what you are reading now.

The first sentence structures the merger clause. The meaning of it cannot go beyond the period. The next sentence highlights the importance of the first. The third explains what it means. Although a merger clause typically is not that complex it is against the background of the process that it was protecting. Writing the contract this way permits it breathe and grow with the business as the business grows.

From Chief Operating Officers to partners at law firms I have never had one turn down a contract written with these three strategies. Arcane contracts are difficult to deconstruct and can result in problems that can lead to costly litigation. Contracts that are appealing to someone’s eyes, simple to comprehend, and easy to read can improve dramatically the business relationships that they form.

__________

Christine works as an attorney in Aurora serving many small business and charitable organizations. She can be reached at:

Christine M. Kieta
481 N. Commons, Suite C
Aurora, IL 60504
630-383-9363
christine.kieta@gmail.com


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