In 2011, GE Aviation, a company that does business with major corporations all over the world, decided to review the contracts they ask their customers to sign. The current contract could be 25 to 52 pages in length and often included two pages of just definitions – what the words meant in the contract, or at least how GE Aviation was defining them.
Of course, once submitted to the customer, the contract had to be reviewed by their lawyers before signing. When changes were made to the contract, as so often happens, then GE’s team of lawyers had to review these. Ultimately, the entire process could take weeks, even months, with both sides waiting to complete the sale.
However, in far too many cases, this went on too long and things got too complicated. The contract and negotiating time caused by the contract took a toll and often killed the sale. This is why GE Aviation decided it was time for a contract review.
By 2014, a new “plain language” contract replaced the old cumbersome one. Instead of a 52-page contract, it was now five to seven pages long. Words such as “heretofore,” “consequential damages,” “breach of warranty,” “force majeure,” and phrases like “notwithstanding anything to the contrary” or “herein subject to the preceding,” were removed.
Once this happened, the amount of time spent on contract review by both parties was cut by more than 60 percent. Customer feedback was universally positive; there was not one dispute over the wording of the contract, so the teams of lawyers were no longer needed; and best of all, the company attributes much of the increase in GE Aviation sales to the new, simplified contract.
The Growth of Janitorial Cleaning Contracts
Janitorial cleaning contracts often start out relatively simple, but as the business grows, so do the page lengths of the contracts. Many times, it is not the fault of the contractor. When doing business, for instance, with city, state, or the Federal government, it is often their contract that must be signed. Invariably, these contracts are several pages long, complicated, and filled with legalese.
However, as the cleaning contractor’s business grows and it services much larger clients, things can become much more complicated, and things can go wrong. The customer wants protections built into the contract to limit their liability just in case something unexpected or unfortunate happens, and the cleaning contractor also wants to take steps to minimize or eliminate their responsibility as well.
This is often when the contractor decides to visit an attorney, and this is also when the multi-page, much more complicated, harder to read and understand contracts are written. However and in all fairness to lawyers, many are now well-aware that a simplified, the more plain-language contract will usually serve both parties better. However, that does not mean that’s the way they always get written.
Getting Back to Simple Contracts
Before we discuss ways to simplify your contract, let’s make sure we are all on the same page as to what a contract is. Essentially, it is a legally binding agreement between two or more people or businesses, usually referred to as the “parties,” for some exchange. For a cleaning contractor, this would be an exchange of cleaning services for which they are paid.
Then it typically contains some “terms and conditions,” and that’s when things can get complicated. To help keep things simple, the first thing to do is see how many contract formats you are now using. Some contractors will have one contract format for use with a large client; another for a smaller customer; one for industrial locations, and still another for a retailer.
In our GE Aviation example discussed earlier, they found the company had seven different contract formats for use with different customers. This caused considerable confusion. Sometimes the wrong customer got the wrong contract, which invariably complicated the sale. As a result, it was decided that the company would have just one, simple, plain language contract for all customers.
The next steps to take are the following:
• Create a team to review the current contract with the goal of simplifying it.
• Everyone on the team must read the current contract and thoroughly understand what it is trying to say. It may be necessary to have an attorney define what certain phrases mean and also make sure you understand why they are in the contract.
• After this, wait a day or two. It often takes a couple of days for everything to settle-in and fully understand what the current contract is trying to say.
• Next, the team must establish some parameters. For instance:
The contract will be no more than one page long
There will be no legalese words used.
No sentences or wording will be pulled from the old complicated contract
Decide, on the reading level of the contract. In GE Aviation’s case, it was decided that if a high-schooler could not understand the contract, it was still too complicated.
• With the parameters in place, each person on the team is to start re-writing each section of the contract as they understand it, but using simple to understand wording.
• Now, merge the drafts and create a first draft based on everyone’s impute. In some cases, the meanings of some sections will need to be discussed.
• Prepare a final draft and then have it reviewed by an attorney
The attorney must be aware of your goals. You want a contract that protects your interests, but you also want it to be short, easy to understand, user-friendly and using plain-language that helps make this part of the sales process quick and easy. In GE’s case, their attorney’s initially believed the plainness of the revised contract was “jarring,” as one lawyer put it. A couple of changes were made, but eventually, they found that the new shorted and simplified contract covered all the bases and approved it.
Things to Avoid
If you take a look at some contracts, they will often contain words that are all capitalized. This is something we want to avoid.
Usually, when a capitalized term is used in a contract, it means that word or phrase has a specific meaning specific and often specific to this contract. Because you want to minimize the use of words that must be defined, use a more straightforward word that is easily understood and does not need to be defined or capitalized.
Other things to avoid include the following:
- Long Sentences
- Using no subtitles or headings; use headings to break up the sections of the contract. It’s easier to read and understand. Often one-word headings work best.
- Hard to read fonts; the font should be large enough so it is easy to read; A cleaner font such as Arial works well and is a universally used font. This means people are accustomed to seeing it.
- Try to avoid using Roman numerals. When numerals such as (l), (lV), etc. are used in a contract, it often makes it more difficult to read the contract.
Finally, and something we do not want to avoid, is to ask for feedback from customers. They will tell you if there are sections they did not understand or need to be revised. Listen to their suggestions. If you agree with them or hear them from other customers, it means revisions are likely necessary.
Ron Segura helps cleaning contractors grow. He has over 45 years of experience in all segments of the professional cleaning industry including ten years as Manager of Janitorial Operations for Walt Disney Pictures and Television. To contact him, call 650-315-8933..