Contracts are the medium by which human relationships, ideas, and agreements, are brought to life and maintained over time. In an increasingly global and digitized world, the role of humans in contracts is becoming more focused and even more important. But all humans are guilty of having implicit biases. That’s why, our implicit biases can often seep into our contracts.
If we’re not careful, this can cause us to communicate unintended (and sometimes offensive or unfair) messages to the other party that can put the contract and underlying relationship at risk.
What are we, in the contracts community, doing to eliminate contract bias?
When was the last time you checked if your contract was biased?
Do you tailor your contract negotiations based on the cultural background of your counterparty?
Do you share your access to legal technologies with your less fortunate counterparties?
Contract experts need to be mindful of contract biases that can arise in contracts, contract negotiations, and contracting technologies. Eliminating contract biases will help you negotiate better contracts, forge deeper relationships, and promote the principles of diversity, equity and inclusion. This CRE Rule #9 on Eliminating Bias will address how to identify and eliminate implicit biases – such as language, gender, and resource bias – from our contracts.
Rule # 9 – Identify and eliminate contract biases.
One type of contract bias is language bias. Language bias occurs when the contract drafter assumes the other party is as fluent in English and English “legalese” as the contract drafter. This type of bias commonly appears in international contracts when one or more parties are not native English speakers.
Identifying Language Bias
Most commercial contracts are drafted in English, regardless of where the buyer and seller reside or what language the buyer or seller speaks. As recognized by Ken Adams’ in A Manual of Style for Contract Drafting, “English is used in contracts around the world, not just contracts between companies from English-speaking countries.”
When the parties’ command of the English language differs, and the contract is drafted solely in English, the parties automatically start on uneven footing. Without a full grasp of the English language, how can an international party fully understand a contract drafted in English or fully advocate for their client’s position? How can they fully deliver on your ask? And when the English-speaking party notices this inherent difference, is that knowledge used for good or do you turn a blind eye to achieve favorable terms?
While many international parties are English savvy and can get by with the basics, the type of English used in contracts (as many of us can attest) is not always straightforward or intuitive. Sure, I can speak conversational Spanish and tell the Uber drive where I want to go. But that doesn’t mean I’m prepared to negotiate a contract in Spanish. Plus, even if you know conversational English, English legalese is arguably a language all its own!
Eliminating Language Bias
To eliminate language bias from contracts, take the following into consideration:
1) whether the contract should be in English, another language, or both, and
2) which language should govern if a dispute arises.
In addition, implement these modern contract drafting principles into your contracts:
- Create a valid non-English translation of the English contract and consider using the non-English version as the primary contract, if suitable.
- Use visual contracts that incorporate images alongside or even replace text – a picture is worth a thousand words.
- Conduct the contract negotiation via email instead of phone to slow the pace and develop genuine understanding between the parties.
- Replace English legalese with English plain language that even a non-native English speaker could understand.
Another type of contract bias is gender bias. Gender bias occurs when contract experts presume to know a party’s gender preference implying that one sex or gender preference is the norm. This type of bias commonly appears in employment agreements, such as confidentiality and intellectual property agreements, offer letters, or termination letters.
Identifying Gender Bias
Gender roles and pronouns have no place in contracts. They do not add any value to contracts, nor would elimination of gender-specific pronouns detract value from contracts. So, as the world moves towards gender neutrality, our contracts should, too.
Eliminating Gender Bias
In order to promote inclusivity in our business relationships, contract experts should steer away from using gender-specific pronouns or language in contracts. In 2018, Thompson Reuters noticed an increase in the number of clients requesting gender-neutral documents. More and more, clients are expecting contract templates to create a path of least resistance, speed up contract negotiations, and align with their core values. How can we do that if we use incorrect pronouns that can offend the other party right off the bat?
To eliminate gender bias from your contracts, you should:
- Move away from third-person pronouns altogether. Instead, reference the parties’ names as defined in the contract. For example, instead of writing “his services” you should write “the Contractor’s services.”
- Use gender fair or gender-neutral language throughout the contract. Until a gender-neutral pronoun is decided upon as a community, we should not be assuming that parties like one gender-neutral pronoun over another. For example, “they” is used as a gender-neutral singular pronoun in English, but not everyone likes it. In addition, courts have not yet ruled on the interpretation of “they” in a contract, which can be interpreted as either a singular gender-neutral pronoun or the plural pronoun referring to multiple people.
- Don’t use a gender catch-all clause like, “Unless the context otherwise requires, a reference to one gender shall include reference to the other genders.” That only reinforces gender stereotypes.
- Ask clients what their preferred gender pronoun is before entering into contract negotiations on your client’s behalf. This way, when you refer to your clients in a negotiation with external parties, you represent your clients the way your clients want to be represented. (See how I avoided using a pronoun in this sentence?)
Another type contract bias that is starting to surface more frequently is resource bias. Like contracts, all contract lifecycle management (CLM) platforms and other legal technologies are powered by humans. Many artificial intelligence (AI) algorithms are trained by humans. Contract templates offered by CLMs are initially drafted by humans. Therefore, our humanistic tendency towards bias can permeate the world of legal technology. If we let it.
In fact, access to such legal technologies is, in and of itself, a presumption made by those of us who are guilty of implicit resource bias. We assume that everyone can review contracts as quickly as we can. That every jurisdiction has legalized e-signatures. That all companies leverage systems to help manage contracts better.
Why do we make these assumptions? Because we assume other parties have the same resources we do. And if they’re too slow or too disorganized, it’s their fault for not putting a better system in place.
Here’s a thought. What if the other party doesn’t have access to future forward tools? What if they don’t have the budget for it? How many times are you going to email them asking for an update before you realize that you’re not helping?
Identifying Resource Bias
Not all parties have the same legal or technology budget. You can spot resource inequities by paying attention to the size of the counterparty’s organization, speed of reviewing or signing contracts, and comfort level when using technologies like Zoom or Skype. A startup may not have the budget to implement a full blown CLM. An international party may be blocked from using a certain technology.
Eliminating Resource Bias
While adoption of CLM and electronic signature tools is on the rise in the U.S., that is not the case in many other countries. When dealing with international contracts and parties who don’t speak English, consider first whether the party’s response time is impeded by their lack of access to legal technology. Then, ask what you can do to help.
Here are a few ideas.
- Offer to create the final clean template for signature instead of asking the other party to do this. Finalizing a document is always easier when you have the right tools, like Word and Adobe, to create a clean document.
- Expect more time for contract review, negotiation and execution. While you may be a part of the most state-of-the-art legal department with a 24-hour contract review KPI, that doesn’t mean the other party can keep up. To best manage this situation, practice some patience. If that is not possible because of an impending deadline, then offer to take on the next round of redlines or the bulk of the work.
- Leverage your tools for their gain. Legal technologies are generally SaaS tools that are charged on a subscription basis per user. Most of the time, use of the tool by third parties (vendors or customers) is built into the pricing. For example, you can leverage your instance of DocuSign to obtain a third-party signature on a contract with paying extra fees.
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While there are other types of implicit biases that we need to be mindful of throughout the deal negotiation, these are the three main types of contract biases that all contracts professionals should strive to eliminate.
If you enjoyed this article on redlining and want to learn more ways to negotiate better contracts faster, check out all 10 Rules of Contract Redlining Etiquette™ by Nada Alnajafi here.
Author: Nada Alnajafi
If your SaaS system is going to be tested in a proof of concept (POC), be sure to put an agreement in place. The POC agreement would ideally restrict access to the SaaS in a test environment, disclaim any warranties and indemnities and require your customer to ensure that no confidential or personal data is processed while in the POC mode. To learn more and join in the discussion, check out my LinkedIn post.