Opinion

Contracts – Let’s go simple, digital and trust-based

25 July 2020

‘Changing to simple digital trust-based contracts is critical – whether that change is driven by profit, by frustration, based on UK government guidance on responsible contracting, or because it seems like the best way out of this crisis. Isn’t it time our industry deserved better?’ Sarah Fox

One glimmer of hope from the recent lockdown is a growing awareness that the current ways of doing business, including contracts, have not actually served our industry well during this period of uncertainty. It’s time to rethink, says Sarah Fox.

How has using complex paper-based one-sided contracts been working out for you during the pandemic? Have you even been able to get a copy of all your relevant contracts when working from home? Once you have it, can you flick through it and find the answers you need? Do those answers bring you and your client/suppliers together or does it set you at loggerheads?

Our current ways of doing business – and that includes the contracts we use – have not actually served our industry well during this period of lockdown. We can’t find, read or understand them. If we get a copy, most contracts have no solid answers. And the answers we find, no-one really likes...

Just think of all those days (not to mention energy and money) wasted on drafting, amending, negotiating and completing those contracts – days that we might wish had been better spent. Where did it get us? In a right pickle! As we can’t change the past, and are powerless to avoid all events like the pandemic, it’s time to take stock and be better prepared.

One solution is to seek out simpler contracts: ones that everyone can read, understand and use. All those clauses, legal jargon and mind-boggling procedures are not helpful in a crisis. We need quick solid solutions not more mumbo jumbo. A contract should act as a project handbook or roadmap, with processes to encourage and facilitate grown-up multi-party conversations, not rigid rules that treat us as naughty toddlers.

What did you learn when you read your contracts? What was the cost to your business? You might have found that just when you needed to be able to get on with it, you had to wait for a lawyer to tell you what ‘it’ even was. Decide now if you want better for next time and if simpler contracts could help provide the flexibility you need for the next unexpected event.

If you really can’t face trying to simplify your contract contents, you could simplify your contract process so you can find them. An agreement to an email is enough to record your contract – you don’t need to print, sign and scan. If you want to be innovative, you can create contracts by video. For better clarity and internal governance, you can create simple editable pdfs which can be signed electronically. Just find a way to do it because a digital contract is much easier to sign, circulate, and interrogate, even if it still contains 200 pages of text.

Not everyone wants to go back to ‘business as normal’. The International Association for Contract & Commercial Management found that 88% of business owners want to see more collaboration and trust. We need a collaborative culture now so that businesses don’t just focus on fighting for survival. Trust can help avoid insolvencies, provided it is hard-wired into your contracts as well as your relationships.

Changing to simple digital trust-based contracts is critical – whether that change is driven by profit, by frustration, based on UK government guidance on responsible contracting, or because it seems like the best way out of this crisis. Isn’t it time our industry deserved better? When we will realise that the value of a contract is not in the number of words used but the strengths of the relationships it builds?

Simple contracts make sound business sense. You can easily price the risks. You don't need to fear nasties hiding in the small print. Based on my 25 years' experience with construction contracts, I stripped back contracts to the bare minimum: they are specifically designed to help you manage the project rather than help lawyers manage claims. A simple contract can safeguard your business without annoying your clients. It’s about time the signing of a contract was a cause for celebration rather than a dour tick-box exercise.

If you would like to write your own simple trust-based contract, then everything you need to know is in my new book on How to Write Simple and Effective Small Works Contracts in Just 500 Words.

Sarah Fox, author of Small Works Contracts in Just 500 Words www.just500words.co.uk