Does Your Contract Say What You Think It Says?

Does Your Contract Say What You Think It Says?

“You keep using that word.  I don’t think it means what you think it means.”    Inigo Montoya, “The Princess Bride”

The above quote is one of my favorite lines from The Princess Bride.  After Venzinni (played brilliantly by Wallace Shawn with a humorous lisp) keeps saying “Inconceivable,” Inigo makes the above assessment.  Which brings me to today’s question:

Are you sure your contract (whatever contract it is) says that you think it says?

If you read as many contracts as I do, sooner or later you are going to find yourself going bug-eyed at the kind of language that lawyers use in contracts.  It is as if the lawyer is getting paid by the word (which may not be far off the mark).  Lawyers can make a contract better or they can make it worse. A skilled lawyer can take an agreement between two parties and make the contract understandable and clear to not only the parties but to strangers to the transaction.  Conversely, an unskilled lawyer, or one overly confident of his/her supposed expertise, can render the same agreement an unreadable mess, all but guaranteeing a dispute.

So how do you know which of these, a clearly understandable contract or an unreadable mess, has been created by your lawyer?

First, go back to basics. Without looking at the contract, what is the essence of the agreement? Describe the contract in one or two sentences. Next, what are the essential terms? Who is getting what and when?  Who is giving something up and when? What is the price or other medium of exchange? It is best to be able to describe your agreement in plain English, in as few words as possible.

Second, go to the contract in question and see if you can find those essential terms. They should be clearly marked and clearly understood.  Sure, some words may have been substituted, but those substitutions should make the terms clearer and more defined, not less so. Each of the essential terms in your plain English description should have a direct correlation to a contract term.

Third, look at all the other terms in the contract, and ask yourself, “Do they have a clearly understood purpose?” and “Do I understand the terms in such a way as to be able to describe it in one sentence?” For example, if your contract is for engaging an independent contractor, the billing and invoicing methods might not be an essential term, but this is a term that has a clear purpose (to make sure you are paying only what you agree to pay). Can you say in one sentence when and how the Contractor is to bill you and when and how you are to pay the contractor? If you can’t, are you sure you understand the term?  The closer to plain English these terms are, the better.

The purpose of this exercise is simple, to make sure that a stranger to the contract can understand the plain meaning of the contract.  If there is a dispute between the contract parties, the first place a court is going to look is at the contract and the meaning of the words in that contract.  A clear contract is the best way to avoid disputes.

If after this short exercise, you are not sure your contract says what you think it says, you should contact an experienced attorney for a second opinion.  Contact us to provide a second opinion on your contract, we will tell you what it actually says so you can compare it to what you think it should say.

Maybe one day we will have a world of easily understood contracts?