Contracts 2.0 simple, visual and understandable
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The document discusses the evolution of contracts in a modern context, highlighting the complexity and cost associated with traditional agreements, particularly in technology and business sectors. It emphasizes the need for simplification in contract language and structure to enhance understanding, efficiency, and reduce legal costs. The future may see the increased use of smart contracts and AI tools to further streamline negotiations and standardize agreements.
![Frame agreement document
[Parties, short overview, unit prices, list appendices, signatures]
Agreement structure Top app provider Inc. – standard frame work agreement
General terms
[Termination, liability, payment, IPR, confidentiality, etc.]
App. 2
Appendix 1
Delivery agreement
(waterfall or agile)
Call-off agreement doc
[Prices, progress, responsible persons, list
attachments for development etc. ]
Delivery description
Standard delivery terms
[Liable for result]
App. 3
App. 3b
Vedll. 3a
Consultancy agreement
Call-off agreement doc
[Prices, progress, responsible persons, list tasks,
attachments, etc.]
Standard consultancy terms
[Liable for competence and effort – T&M]
App. 4
Delivery description
App. 4b
App. 4a
Managed services
Call-off agreement doc
[Prices, progress, responsible persons, tasks, list
attachments etc.]
Standard conditions MS
[Liability maintenance, error correction etc.]
App. 5
Delivery description
App. 5b
App. 5a
2676 words
919
words
Agile method
2588 words](https://image.slidesharecdn.com/contracts2-171110070634/85/Contracts-2-0-simple-visual-and-understandable-14-320.jpg)
Contracts 2.0 simple, visual and understandable
- 2. Contracts 2.0 - Simple, Visual and Understandable: Dawn of a New Era? Itechlaw conference Stockholm, 20 October 2017
- 4. An agreement... • What is it? • What‘s its fundamental function? • Achievable without understanding it?
- 5. «I teach contract law at Harvard Law School and I can't understand my credit card contract. I just can't. It's not designed to be read.» Elizabeth Warren, former Professor of Law, Harvard Law School
- 6. Today’s world • More transactions • Smaller transactions • More complex • More critical
- 7. • Reduce transaction cost • Increase understanding Today’s needs
- 8. How a small country has coped • Small population • Small transactions • Complex subject matters
- 9. Standard form contracts • Construction • Delivery industry • IT
- 10. Word count general terms
- 11. How to make it simpler? • Target group • Structure • Language & length
- 12. Target groups • CEO? • CFO? • CTO? • Lower level techies and developers? • HR?
- 13. Structure
- 14. Frame agreement document [Parties, short overview, unit prices, list appendices, signatures] Agreement structure Top app provider Inc. – standard frame work agreement General terms [Termination, liability, payment, IPR, confidentiality, etc.] App. 2 Appendix 1 Delivery agreement (waterfall or agile) Call-off agreement doc [Prices, progress, responsible persons, list attachments for development etc. ] Delivery description Standard delivery terms [Liable for result] App. 3 App. 3b Vedll. 3a Consultancy agreement Call-off agreement doc [Prices, progress, responsible persons, list tasks, attachments, etc.] Standard consultancy terms [Liable for competence and effort – T&M] App. 4 Delivery description App. 4b App. 4a Managed services Call-off agreement doc [Prices, progress, responsible persons, tasks, list attachments etc.] Standard conditions MS [Liability maintenance, error correction etc.] App. 5 Delivery description App. 5b App. 5a 2676 words 919 words Agile method 2588 words
- 15. Language and length • Choice of words - don’t try to impress • Short sentences - max 25 words • Instructive headings
- 16. • Break paragraphs into –Lists –Smaller paragraphs • Size vs. coverage vs. word economy? • The world works
- 18. © de la cruz beranek Rechtsanwälte AG Contracts 2.0 – a Swiss perspective Carmen De la Cruz, Attorney at Law Diploma in IT & Economics
- 19. © de la cruz beranek Rechtsanwälte AG Contracts 2.0 – Swiss perspective (1) - today • Language and short terms (mainly of laws) have a long tradition • Fall-back positions given by law • Longer and complex terms often also driven by international drafting • Very often standard questions negotiated with similiar output • High legal costs for negotiations -> input on business case! • Regulatory requirements lead to high efforts 19
- 20. © de la cruz beranek Rechtsanwälte AG Contracts 2.0 – Swiss perspective (2) - today • Standard agreements for IT contracts • Big players: large & global agreements (still) – also due to regulatory requirements • Modularity of agreements 20
- 21. © de la cruz beranek Rechtsanwälte AG Contracts 2.0 – Swiss perspective - tomorrow • Strong smart contracts influence – does tomorrow‘s contract need to be programmable? • New market players – blockchain start-ups (Crypto Valley services) • Usage of workflow / AI-based tools for negotiations • Strong commercial support • Improved internal organisation • Outsourcing of Purchasing -> standardization 21
- 22. © de la cruz beranek Rechtsanwälte AG Technology Stack Smart Contracts Blockchain Protocol of consent P2P Protokoll TCP/IP 22
- 23. © de la cruz beranek Rechtsanwälte AG Contracts 2.0 Programmable? Secured and self-executed? Inter- disciplinary? Shorter – fewer regulatory requirements? Standardization of liability due to AI, IoT tec.? Fewer resources?
- 24. Privileged & Confidential Breakout (1): Contracts 2.0: a new era? Breakout (2): Disputes 2.0: a new era? Break-out sessions - 25 minutes
- 25. Privileged & Confidential Breakout (1): Contracts 2.0: questionnaire Statement of principle Agree / Disagree?* 1. Customers find contracts too complex and costly. 2. Lawyers do not really see the use for or benefits of shorter, simpler contracts. 3. Customers only use contracts when disputes arise, not as practical tools in their daily work. 4. Lawyers have poor insight into how contracts could actually be used by customers after signing (except in the case of disputes). 5. Customers would like to use contracts as a practical tool in their daily work. 6. Lawyers know how contacts should be negotiated, drafted and designed so they can be used as practical tools by customers in their daily work. 7. Lawyers can and should make negotiations go faster, contracts shorter and the agreement process more cost efficient. 8. Lawyers and customers are now using software tools to support negotiations, drafting and design of clauses in contracts. * Strongly Disagree…......................Strongly Agree 1………..2…....…....3……......4…… .….5
- 26. Privileged & Confidential * Strongly Disagree…......................Strongly Agree 1………..2…....…....3………......4…… .….5 Breakout (2): Disputes 2.0: questionnaire Statement of principle Agree / Disagree?* 1. Unrealistic estimates of time and cost to complete are root causes of failure on technology projects. 2. Unclear scope of responsibilities is a root cause of failure on technology projects. 3. Bespoke or tailor made technology contracts (as opposed to standardised contracts) are prone to disputes. 4. Contracts that allocate too much risk to one party are prone to disputes. 5. Poor contract drafting by lawyers causes most disputes. 6. Lawyers should have a wider, consultancy style role on technology contracts and projects to help prevent disputes. 7. Governance and dispute resolution clauses are easy to understand and always followed. 8. Mediation is commonplace but clients now want (even) quicker and cheaper ADR procedures. 9. Where more formal dispute resolution is required, court litigation is preferred to arbitration
- 27. Privileged & Confidential Feedback from break-outs Plenary session - 15 minutes
Editor's Notes
- #5: IS: Structured communications FUNCTION: Adjust expectations If not > disputes and suboptimal outcomes Must understand
- #6: Just imagen your poopr client Hard to overestimate how little the normal reader understand NOW on PBS interview Week of 1.2.2009 Read the Government Accountability Office (GAO) study on this. The GAO looked at credit cards and they said: "Nobody can understand this stuff." Are you kidding me? And understand when you've got terms that say: "In effect, we'll charge anything we want any time we want for any reason or no reason at all," what's the point of reading it? http://www.pbs.org/now/shows/501/credit-traps.html https://www.consumer-action.org/press/articles/new_gao_credit_card_study_highlights_anti_consumer_practices/
- #7: MORE: Move from big bang to smaller projects Constant imporovement and change That means SMALLER deals COMPLEX Still – more systems, and things, connected CRITICAL We depend more and more on the services They break down, business and society break down
- #8: We must, if we are to serve our clients real needs If we don’t, someone will - eventually
- #9: Small contracting resources, but quite large needs How have Norway coped? [standard form contracts]
- #10: All fabrication Similar challanges More experience in construction and delivery industry Delivery industry = oil and gas = offshore Standards much used in Norway In all areas. Substantial reliance on background law How do they messure up in size?
- #11: Anlgo-Am influence in Norway too Getting bigger. Must try to stall Plain language initatives also in Norway, but with a public sector focus.
- #12: INTRO: Anglo American - tend to be quite monolitic Legalize Drafted for litigation, not collaboration Think - Target reader - Adapted strucutre Language and length
- #13: All related: To whom is the contract directed? Various people: CEO? - not really - relies on his people CFO - yes - epecially commercial terms - financial head CTO - yes - much of the performance - technical stuff Lower level techies - YES! - are to implement it HR - can be - outsourcing - all types Lawyers? NO! Just in the drafting process - and when serious problems So why not draft according to target groups? Do they understand legalise? NO Not even professor Warren understood. Is possible to overestimate lack of understanding? Hardly Consequence: Structure most support target groups Language adapted to target gropu = simple - KISS!
- #15: Frame agreement – good for CEO and CFO – good intro to any reader Then – agreements for each main delivery area/phase: Develop, consult and manage. Within each «tower» – only text relevant for the area. Referances to General terms, if needed EX: - Delivery description for agile option in developent: Overaching aims and party info in one doc, the core agile dev method in short separate – for developers and project manggers to understand Standard terms at bottom – general for all All short
- #16: Small is beautfy ful
- #17: SIZE: Not allways a trade-off. Can often say the same with fewer (and simpler words) Should every consivable situationi be regulated? Maybe not. Total contract risk may increase do to reduced readability (and reading!) Accept som white spots, in the fringes, or make them short WORLD WORKS Surprise! Lawyers trained in finding probems Eventually believes the world is nothing but problems Not right – most things works – one way or other
- #18: Thanks!