The Myth of the Simple Contract

Simplicity Flows from Understanding

I hear many business owners tell me from time to time that they just want a simple contract. Why can’t contracts be simpler? Or some other variation on this point.

But these business owners are misleading themselves. You don’t want a simple contract; you want one you understand.

Business isn’t simple. Relationships aren’t simple. Human nature isn’t simple. There aren’t many things in adult life that we can fairly describe as simple, so why should a contract be any different?

A contract is a set of promises and expectations about the course of a relationship. It has to present the parties’ shared view of a situation, and weave together a system of exchanges of promises and performance where each party receives some benefit and bears some level of risk. It has to anticipate the various pain points where things can go wrong and prevent these problems or present solutions to resolve them, before they’ve happened. It has to anticipate bad behavior before it starts.

That’s anything but simple.

But all hope isn’t lost. While there’s no such thing as a “simple contract”, a contract should be understandable. A contract is a tool like anything else, and your lawyer is your blacksmith. It doesn’t matter how great the tool is. If your lawyer hasn’t taught you how to use it, you can’t do anything with it.

Good contract drafting involves incorporating your goals into the design of the agreement. Great contract drafting involves distilling your goals into a strategy, making the contract text readable so that you can see how each section achieves your goals, and working with you through the drafting process so that you understand how all of the text works together to implement your strategy.

Once you understand how to use the tool, its use becomes simple, to you.