Acceptable Dysfunction?

By Ken Adams

Ken Adams here. This is from this 2017 LinkedIn article. The sad reality is that most contract templates are poor, and most people are either unaware of that or are willing to tolerate it. I think it’s best to fix the dysfunction.

To do business, your company has to enter into contracts. But your company's contract templates are dysfunctional.

Of course, the odds are that I know nothing about your company's templates. But I've seen many templates, and they've all shown room for significant improvement. Many were downright embarrassing. So it's overwhelmingly likely that the same goes for your templates. What are you going to do about it?

What's that? You're not going to do anything? That means you've decided that it's an acceptable cost of doing business to waste time and money, hurt your company's competitiveness, and assume unnecessary risk of a contract dispute every time you use one of your company's templates. Don't underestimate the cumulative effect of that dysfunction. That's something I discuss in this recent blog post.

Furthermore, you're not actually in a position to assess that risk, because you don't know how bad the problem is: it's an "unknown unknown." To put it more conventionally, it's easy to believe that your contracts are clear and concise if that belief has never been tested. And that belief will not have been tested if your templates were built with "passive drafting." That's where you copy-and-paste, on faith, the language of precedent contracts of questionable quality and relevance, doing without guidelines for clear contract language and doing without rigorous training.

What's that? You'll fix the problem yourselves? That's unlikely. For one thing, those responsible for a problem are the least likely to be in a position to fix it. Furthermore, the work requires contract-drafting specialists. As I say in this blog post, you're unlikely to find them in company law departments, as those handling transactions for a company aren't likely to have the time or the specialized expertise required.

You still think your contract templates are fine? Here's a simple way to make sure your gamble is justified: send me one of your templates. At no charge, I'll tell you what I think of it.

Ken Adams is president of Adams Contracts Consulting LLC, author of A Manual of Style for Contract Drafting, and an advisor to LegalSifter.