Plain Language Contracts: Why They Matter for Businesses

Introduction

In today’s fast-paced business environment, clear and concise communication is essential. One of the most overlooked aspects of effective business communication is contract drafting. Traditional legal contracts are often filled with complex jargon, making them difficult to understand for non-legal professionals. This is where a Plain Language Contract comes in. By using simple, straightforward language, businesses can enhance clarity, reduce disputes, and foster trust among stakeholders.

This guide will explain why Plain Language Contracts matter, how they benefit businesses, and the steps to creating contracts that are legally sound yet easy to understand.

What is a Plain Language Contract?

 A Plain Language Contract is a legal agreement written using language that an average person can easily comprehend. This type of contract actively avoids complicated legal terms and convoluted sentence structures. Instead, the information in a Plain Language Contract is presented clearly and logically. Think of it as a contract one can genuinely read and understand, rather than a document merely signed with hope. The focus is on plain, accessible language. Every contract should strive for this clarity.

Why Do Businesses Need Plain Language Contracts?

Contracts are the backbone of business relationships, outlining the rights and obligations of all parties involved. However, traditional contracts often contain complex legal jargon that can be difficult for non-lawyers to understand. This can lead to confusion, delays, and disputes. A Plain Language Contract removes unnecessary complexity, making agreements more accessible and efficient. Here’s why businesses should prioritize using clear and straightforward contracts:

1. Improved Clarity and Understanding

A Plain Language Contract ensures that all parties—whether employees, customers, or vendors—can easily comprehend the terms of an agreement without needing a legal background. When contracts use simple, direct language, they reduce the risk of misunderstandings. Instead of sifting through complicated legal terms, parties can quickly grasp their rights, responsibilities, and expectations. This clarity helps businesses operate more smoothly, as all stakeholders know exactly what is required of them from the outset.

2. Reduced Legal Disputes

Many business conflicts stem from ambiguous contract terms that leave room for multiple interpretations. When agreements are filled with legalese, different parties may interpret clauses differently, leading to disputes and even litigation. A Plain Language Contract minimizes this risk by making terms explicit and understandable. By clearly defining obligations, deadlines, and consequences, businesses can prevent costly legal battles and maintain positive relationships with clients, employees, and suppliers.

3. Faster Negotiations and Execution

Time is a valuable resource in business, and contract negotiations can often be a lengthy process when agreements are overly complex. Traditional contracts filled with intricate legal terminology require extensive reviews by legal teams, slowing down decision-making. A Plain Language Contract eliminates unnecessary legal complexity, allowing parties to quickly read, understand, and agree to terms. This streamlined approach reduces back-and-forth discussions, speeds up contract execution, and enables businesses to close deals faster—giving them a competitive advantage.

4. Enhanced Trust and Transparency

Trust is essential in any business relationship, and a Plain Language Contract fosters transparency by making agreements easy to understand. When contracts are written in simple terms, they signal that the business values honesty and fairness. Whether dealing with customers, employees, or suppliers, clear agreements build confidence, reduce skepticism, and strengthen professional relationships. Transparency also reassures clients and partners that the business operates ethically, which can lead to long-term loyalty and collaboration.

5. Legal Compliance and Enforceability

Some businesses worry that simplifying contracts might make them less legally enforceable. However, the opposite is often true—many courts prefer contracts that are written in clear and straightforward language. Complex contracts filled with vague terms can be more difficult to enforce because they leave room for interpretation. A Plain Language Contract, on the other hand, removes ambiguity, ensuring that terms are legally sound and more likely to hold up in court. Additionally, regulatory bodies in some industries encourage or even require the use of plain language to ensure compliance with consumer protection laws.

How to Create a Plain Language Contract

Creating a Plain Language Contract might seem challenging, but it is definitely achievable with the right approach. Here’s a step-by-step guide to help businesses get started using plain language:

1. Know the Audience for the Contract

Before drafting begins, consider who will be reading the contract. Are they lawyers, business professionals, or general consumers? The language and level of detail should be tailored to the audience’s likely understanding. Think about the specific type of plain language they would best respond to in the contract.

2. Use Simple and Direct Language

Avoid jargon, technical legal terms, and overly formal language whenever possible. Opt for simple, everyday words that are easy to grasp within the contract. For instance, instead of “hereafter referred to as,” use “later called.” Use plain terms throughout the contract.

3. Keep Sentences Short and Concise in the Contract

Long, complex sentences can be difficult to follow. Break down ideas into shorter, manageable sentences within the contract. Aim for one main idea per sentence to maintain plain language.

4. Use Active Voice in the Contract Language

Active voice makes it clear who is responsible for performing an action in the contract. For example, instead of “Payment shall be made by the client,” write “The client will make the payment.” This direct language improves the contract’s clarity.

5. Define Key Terms in the Plain Language Contract

If specific legal or technical terms must be used in the contract, define them clearly within the document itself. This ensures everyone reading the Plain Language Contract shares the same understanding. Define any term that isn’t plain.

6. Use Clear and Logical Structure for the Contract

Organize the contract in a coherent, easy-to-follow manner. Use headings, subheadings, and bullet points to break up text and make the contract more scannable. A good structure supports plain language.

7. Consider Visual Aids in the Contract

Think about using visual aids like charts, tables, or diagrams to help explain complex concepts within the contract. This can make the Plain Language Contract more engaging and easier to understand.

8. Get Feedback on the Draft Contract

Before finalizing the contract, ask someone unfamiliar with the subject matter to read it. Inquire if they understand the terms and if any part of the language seems unclear. This feedback helps identify areas needing improvement for a truly Plain Language Contract.

Examples of Plain Language in Action in a Contract

Let’s look at how complex legal language can be transformed into plain language within a contract:

• Original: “The lessee shall be responsible for all maintenance and repairs to the premises, including but not limited to, plumbing, electrical, and HVAC systems.”
• Plain Language: “You are responsible for maintaining the property, including the plumbing, electrical, and heating/cooling systems, as stated in this contract.”
• Original: “The vendor shall indemnify and hold harmless the purchaser from and against any and all claims, damages, losses, costs, and expenses arising out of or relating to the products.”
• Plain Language: “The vendor will protect the purchaser from any claims, damages, or expenses related to the products described in this contract. This uses plain language.”
• Original: “This agreement shall be governed by and construed in accordance with the laws of the State of [State Name].”
• Plain Language: “The laws of [State Name] govern this agreement (this contract).”

Read More: How to Draft a Simple Contract

Common Pitfalls to Avoid When Drafting a Plain Language Contract

Even with good intentions, mistakes can happen when drafting a Plain Language Contract. Here are common pitfalls:

• Over-Simplification: While using simple language is crucial, avoid simplifying to the point where the contract becomes ambiguous or legally inaccurate. The plainness shouldn’t compromise precision.
• Lack of Legal Review: Plain language does not mean ignoring legal requirements. Ensure the contract complies with all relevant laws and regulations. A lawyer can confirm the contract is sound.
• Inconsistency: Use consistent language and terminology throughout the Plain Language Contract. Avoid using different words for the same concept, as this creates confusion.
• Ignoring Format: Pay attention to formatting. Use clear headings, bullet points, and white space to make the contract easy to read. A clean layout supports plain language.

Conclusion

A Plain Language Contract represents a win-win for businesses and their stakeholders. These contracts reduce misunderstandings, build trust, save resources, and ensure compliance. By embracing plain language, companies can foster stronger relationships, avoid costly disputes, and ultimately achieve greater success. A clear contract is good business. Don’t let complex legal language be a barrier; take control and make every contract understandable. The business (and its partners) will benefit from every Plain Language Contract used. The days of deciphering overly complex legal documents can end by choosing plain language for every contract.

Did you find this Legitt article worthwhile? More engaging blogs about smart contracts on the blockchain, contract management software and electronic signatures can be found in the Legitt Blogs section. You may also contact Legitt to hire the best contract lifecycle management services and solutions.