The Recipe for Better Contract Design

The Recipe for Better Contract Design by Stefania Passera for Contract NerdsFor too long, contracts have been the domain of lawyers with very little real engagement from the business or users.

My mission as a “contract (design) nerd” has been to help contracts professionals to look at their commercial contracts through the eyes of the everyday users who need to act upon them. Judges and lawyers, who may read contracts in case of a controversy, are not the only audience of a contract.

On the other hand, when people see examples of user-centered contract design, they often stop at the surface of what the design looks like. Let’s get it straight: contract design is not about making contracts pretty or adding a few icons. Good visual communication design plays an important role in communicating contracts and making them more usable – but it is not enough.

So, what’s the recipe for better contract design? I have been seeking a clear answer in the last months, after getting involved in the launch of World Commerce & Contracting’s Better Contract Design Mark.

The Better Contract Design Mark

The Better Contract Design Mark is a recognition for contracts that excel in being clear, user-friendly, visual, inclusive, and good for business. This initiative led us to pin down and describe the criteria that makes a contract user-centered. We created an evaluation framework on the basis of the pioneering research work of the Simplification Centre and its founder, Rob Waller.

Better contracts are not only about fit-for-purpose content but also about effective communication. A combination of these four ingredients will get you there: relationship, usability, language and design.

Relationship

Commercial contracts are not only legal instruments. They should also be primarily tools for business engagement. Research and practice have long recognized the importance of relational contracts. Nobel Prize winner Oliver Hart even proposed the idea of formal relational contractscontracts written and designed to maximize from the beginning trust and collaboration.

Aim at contracts that go out of their way to inform and clarify, reassure, and feel fair. Try to “walk in the shoes” of the various contract users. Take an approach based on their perspective. Check the “tone of voice” of your contract – do you sound like a reasonable business partner? Like a bureaucrat? Like a bully?

When you are considerate, you can generate a lot of goodwill. You’ll build better relationships and a reputation for ease of doing business.

How to Design Contracts with the Relationship in Mind

  • Consider the abilities, knowledge, needs, and pain points of the contract users.
  • Tailor your content. Nobody wants to read clauses that don’t apply to their situation and may cause confusion and doubt.
  • Be reasonable and don’t throw in extra clauses just-in-case. Overprotection usually results in longer negotiations (a.k.a. delayed cash flow) and sets up the parties for an adversarial relationship.
  • Frame your clauses in terms of problem-solving rather than punishment.
  • Offer straightforward contact points (who, how, when to contact. And renounce outdated channels, like fax!)

Usability

Contracts are, often, intrinsically complex. Why should we needlessly increase our users’ cognitive load by adding extra complexity in the form of confusing document organization, uninformative headings, dense layouts, jargon?

Nobody reads contracts for fun. We read them to understand what we need to do, how, and when.

How to Design Contracts with Usability in Mind

  • Busy people don’t read; they skim-read strategically for information they need. To build an intuitive document, group related topics together, in a logical and coherent way. Make visible how the content is organized (e.g., with prominent section dividers and abundant headings). It will make it easier for users to search and find key information at a glance.
  • People focus on what they consider relevant and search for “storylines” that match their expectations. Don’t fight these mental models. Understand them. Organize and present information from the user’s perspective to maximize understanding.
  • People want precise answers to their questions. Help your contract users to understand the practical implications of a clause and how to act upon it correctly. For example, break down tricky processes and mechanisms step-by-step. Then, further explain them through visuals (e.g., timelines, flowcharts) or examples.

Language and Design

It’s not enough for contracts to say the right thing – they need to say it in the right way!

Language and design are concrete ways to convey your relational intent and make contracts clearer and more usable. According to a 2016 World Commerce & Contracting’s survey, 88% of business people find contracts “hard or very hard to understand.” This has a negative impact on negotiations, implementation, and cross-functional collaboration between legal and business.

How to Improve Contracts with Language and Design

  • Simplify your language. Plain language is more persuasive and builds credibility.
  • Transform the look and feel of your contracts with visual design and information architecture. This wins back the attention of disengaged users.
  • A well-structured, legible layout helps to make sense of the content.
  • Some information is simply better explained through diagrams than prose. Leverage timelines, flowcharts, swim lanes, and tables to communicate effectively. Check out World Commerce & Contracting’s Contract Design Pattern Library for inspiration!
  • The very fact that you are making an effort to be clear conveys respect, consideration, and commitment to the counterparty.

The Time for Better Contract Design is Now!

The revolution is underway: time to upskill and get on board! In a fast, technology-driven world, business stakeholders are keen to move away from dense walls-of-text. Simpler, user-centric contracts just make sense. They make for better business and better trading relationships.

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