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ANALYSIS: Fewer Words, More Pics: Improving Commercial Contracts

Oct. 13, 2021, 9:26 PM

Better design, plainer language, and more pictograms make the written transmission of ideas easier to digest. It makes sense. Take, for example, the safety instructions in an airplane. Using pictures and signs, comprehensive directions are depicted in a language that, like music, can be understood by all audiences.

Some forward thinkers now believe that contracts can provide added value by adopting similar types of design change. They contend that plain language and user-friendly formats enhance trust and speed-to-completion in commercial negotiations.

Understanding and Acceptance

Better user experience and better perception by business partners lie at the heart of these recent efforts. Easily understood contracts generate trust in the reader and confidence in the process. Standard contracts are more readily accepted by counterparties if they are clear, transparent, fair, and understandable. And who can argue? How often do consumers and business partners simply ignore dense legal jargon, sign on the dotted line, and hope that things will work out? Contracts are written by lawyers for lawyers (and judges), the saying goes, not for regular people to read and understand.

Some companies are at the forefront of the visual-contract initiative, and Shell Marine, a division of Royal Dutch Shell, is perhaps the most widely cited. In an effort to create stronger vendor relationships, simplify general terms, and avoid prolonged negotiations, Shell developed an illustration that clearly depicts the topic of delivery and risk of loss in a variety of product delivery methods, using colors and images. See below. Airbus and others are joined in similar efforts.

Source: Royal Dutch Shell

Replacing the Written Word

The written contract word, as the expression of the parties’ bargain, is unlikely to be wholly replaced by images and pictures. This raises a question: What if the words and the illustration do not match? Which takes precedence? It will be up to a court to determine how the ambiguity should be decided.

Perhaps someday a court will rule that a meeting of the minds and mutual assent have been demonstrated with pictures and signs in a written contract. For now, however, the visual tools appear to be illustrative only. They do not themselves create binding obligations on the parties apart from the words used to introduce or explain them. The Shell example above demonstrates this point. But the selective use of visual aids to clarify general or even complex contract terms is nonetheless a worthwhile endeavor for business partners.

Bloomberg Law subscribers can find related content on our In Focus: Contract Drafting resource page.

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