Out-Law / Your Daily Need-To-Know

Out-Law Analysis 3 min. read

Business benefits to taking an empathetic approach to contract drafting

Adopting an empathetic approach when drafting contracts can play a pivotal role in business relationships, allowing for more efficient negotiations as well as helping to avoid conflict or litigation based on the contract down the line.

Ensuring a contract is legally accurate should be a given, but there is much more to a working contract than the law. Simply ensuring a document ticks all the legal boxes may not be enough as it is important that the contract represents the values of the business it represents. For example, if the parties to the contract advocate sustainability or services, customer services or innovation, it is important to weave these elements through the contract.

An empathetic approach involves firms putting themselves in the shoes of customers, suppliers, partners, and even colleagues, considering all perspectives to ensure suitability. Acknowledging not only the needs of each party but their interests and emotive reaction to it is key. While this does not mean agreeing with everything each party to the contract says or does, gaining an overall sense of what the contract means across the board can provide space for negotiations and a healthy ongoing professional relationship.

How to approach a contract with empathy

A good starting point is to think about who the contract users are. What types of business are they and what do they value? It is also important to figure out what the contract and the parties it binds aim to accomplish, addressing any foreseeable issues and complaints to allow for plans to counter any conflicts in the future.

Considering how the contract will be read is also important: for example, on what media will the contract be read or whether there is a design theme that should be applied.

In addition thinking about the business needs and goals including the values that should be communicated within the organisation, to other businesses, and to consumers, is also important. This could incorporate consideration of the relationships the contract could build or any practical problems or uncertainties that the contract is aiming to address, both in house and more broadly.

In more practical terms, incorporating signposting in the text, putting the main message of the contract first, keeping sentences short, and using simple and clear language are ways to apply an empathetic approach. Visual appearance can also be important with the use of columns, bullet points, timelines, diagrams and flow charts advisable if these elements can make aspects of or explanations within the contract easier to digest.

Where can problems arise if contract design omits empathy?

Absence of empathy can cause problems for both the writers and readers of a contract.

Generally, if suppliers or customers are not able to understand the contract or find it difficult to digest its key points, the risk of a breach increases. Individuals or businesses that misunderstand the contact may make mistakes in implementation, leading to claims and disputes which can be costly in terms of both time and money.

Contracts built without any input from business stakeholders may fail to understand the day-to-day processes of the business. If business stakeholders are not engaged in drawing up the contracts, they are not provided the opportunity to share their knowledge, risking the omission of vital areas of the business to allow the contract to work most effectively.

For readers of the contract, length can be an issue. If the contract is unnecessarily long, the reader may only skim read and miss out on important elements, potentially leading to a breach. Often, parties to a contract will require a quick answer to issues that they face under the document. However, if the contract is too long, lacking in signposting or is written in a way that is difficult to understand, the reader may not be able to address the issue at hand. A style that is not suited to the specific businesses involved in the contract can also make it more time consuming to negotiate.

Empathy in contracts can go even further, taking into account the personal and specific needs of anyone involved in its function. If someone using the contract is colour blind, for example, it may be important to consider colour choices and patterns, or if English isn’t the individuals first language.

Empathy in contracts can help businesses avoid litigation and provide other benefits

Difficulty implementing a contract can lead to conflict, with parties involved in the agreement unwilling or unable to deliver on their obligations. Concluding contracts with empathy in mind, whether it be considering the layout and language used or what values underpin the document, can allow for a better overall understanding and compliance with contractual means. This, in turn, can help businesses avoid litigation.

Being upfront about expectations often results in a more successful contract because it is much more than what the document says from a legal position.

Contracts created using an empathetic lens often result in quicker turnaround times. This means that, if the contract is a supplier agreement, the supplier can start delivering sooner; or in cases of sales agreements, the client could start generating revenue quicker.

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