3 Simple Ways to Make Your Contract Easier to ReadMar 15, 2022
Product license and supply contracts describe what the product does and what remedies apply if it doesn’t.
We see these concepts in a few places in our contracts –
- the definition or a more detailed specification
- any specific acceptance criteria, and
- product warranties and remedies.
I talk a lot about the importance of saying everything in your contract only once. But we shouldn't stop there.
We also need to create contracts that follow a predictable pattern and use terminology that makes sense. Here are three things to remember:
1. Ensure related references are consistent
Even if you say everything only once, you may need to address related things. When you draft, make sure to verify that the wording and obligations are consistent with each other.
So if your specifications say that the product does 1, 2, and 3, your acceptance criteria should line up with those three things.
2. Put them where you’d expect
I often see counterparties wanting to drop in product obligations in random places. This approach makes it much harder to keep a clear picture of the product obligations.
3. Consider the context and terminology of related documents
If the parties have a series of transactions, keep the organization and terminology consistent. So use the same section order when you can and use similar terminology. Identifying a counterparty as "Company" in one contract and "Customer" in the other makes the deal terms harder to digest and discuss.
In sum, say everything once and say it where it belongs.
Don’t put warranty terms in the change order section.
Don’t put acceptance criteria in the payment section.
Your coworkers and counterparties will thank you.