Plain language complexities in contracts

As you probably know by now, the Consumer Protection Act mandates contracts written in plain language. That means al that legal jargon few people understand should be removed and replaced with more straightforward language that the average person can understand, not just multi-lingual lawyers with a strong grasp of conversational Latin, Old English and Dutch. While we can all appreciate the value of plan language in a document as complex as a contract, actually writing a contract in plain language and still dealing with all the issues you need to deal with in a contract isn’t always that easy.

Contract

One of my clients asked me to take a look at a set of clauses in an agreement I prepared for the client a little while ago. The clauses are designed to limit my client’s liability and were the latest iteration of the liability limitation clauses I used in my contracts (lawyers frequently have precedent banks where they store old precedents and examples of contracts and documents – more often than not any documents your lawyer prepares for you is based on precedents in your lawyer’s precedent bank). Like many lawyers, I improve clauses I use in contracts almost on an ongoing basis. Each agreement I prepare for a client typically represents the latest wording and structure that I am using. The clause in question looked a little like this:

  1. LIABILITY
    1. Disclaimers and limitation of liability
      1. The Customer agrees that Acme is unable to, and is not required to, guarantee a particular result or set of results.
      2. The Customer agrees that Acme shall not be liable in respect of any loss or damage caused by or arising from the unavailability of, any interruption to the Services.
      3. The Customer further agrees that –
        1. under no circumstances whatsoever, including as a result of Acme’s negligent acts or omissions or those of its servants, agents or contractors or other persons for whom in law Acme may be liable, shall Acme or its servants, agents or contractors or other persons for whom in law Acme may be liable (in whose favour this constitutes a stipulatio alteri or stipulation for another), be liable for any direct, indirect, extrinsic, special, penal, punitive, exemplary or consequential loss, damage or damages of any kind whatsoever or howsoever caused (whether arising under contract, delict or otherwise or as a violation of any Party’s intellectual property rights and whether the loss was actually foreseen or reasonably foreseeable), including but not limited to any loss of profits, loss of revenue, loss of operation time, corruption or loss of information or data and/or loss of contracts sustained by the Customer, the Customer’s directors, servants, dealers or Customers, resulting from the performance or availability of the Services.
        2. no claims or legal action arising out of, or related to, the Services or this Agreement may be brought by the Customer more than 1 year after the cause of action relating to such claim or legal action arose.
    2. Indemnity
      1. The Customer hereby indemnifies Acme and its officers, directors, employees, servants, agents or contractors or other persons for whom in law Acme may be liable (in whose favour this constitutes a stipulatio alteri or stipulation for another) from any loss, damage, damages, liability, claim, expenses, costs orders or demand due to or arising out of or for:
        1. any violation of any Party’s intellectual property rights including, but not limited to, copyright, trade mark and/or patents; and/or
        2. breach of privacy as a result of the collection and/or processing of personal information (as defined in the Promotion of Access to Information Act, No. 2 of 2000) by the Customer, its directors, employees, agents, suppliers, contractors or service providers; and/or
        3. defamation or slander; and/or
        4. any loss or damage arising out of or in connection with an act or omission of the Customer in connection with the Services or facilities provided by Acme to the Customer.

    These clauses cover quite a bit of ground and are intended to curtail Acme’s liability to the point where any potential liability for harm suffered by something other than gross negligence (you can’t contract your way out of liability for gross negligence) or wilful misconduct should be pretty limited. The immediate problem with the clause is that it really isn’t very easy for the average person to understand on a first or second reading and that prejudices usability quite a bit. Adding to this, the Consumer Protection Act requires companies dealing with consumers to highlight these sorts of clauses and when you factor in the plain language requirements, these clauses need to be intelligible to the average person. Unfortunately it isn’t, despite it being a fairly good attempt at achieving their objective.

    I took a look at this clause yesterday afternoon and thought there had to be a better way to achieve the clauses’ objective of limiting my client’s liability while keeping the clauses written in as plain language as is possible. When it comes to plain language, there is always going to be a tension between using efficient and effective language and writing the clauses as simply as is possible to make the clauses intelligible to the average person. That is not easy at all. One reason is that many of the terms lawyers use are almost shorthand for fairly complex concepts with a lot of legal development behind them. Ditching the terminology would require us to explain the concepts in sufficient detail to retain the effect of the clause and not detract from that effect by diluting the language with terminology that is too simplistic. I suppose its analogous to watering down the jet fuel to a point where people can handle it safely but at the risk of negating its value as propellant in the jet.

    So I sat down with this complicated set of clauses and reworked them over the course of a couple hours. The process involved looking closely at what each element of the clauses was intended to achieve, the legal implications of those clauses and considering whether there was a way to achieve the same effect without blurred vision and headaches. This is one of the versions we (I collaborated with one of my colleagues) came up with:

    1. LIABILITY
      1. Disclaimers and limitation of liability
        1. The Customer agrees that Acme is unable to, and is not required to, guarantee a particular result or set of results pursuant to the provisions of this Agreement.
        2. The Customer agrees that neither Acme or Acme’s Associates shall be liable to the Customer in respect of any loss, damage or damages, howsoever caused and howsoever arising, as a result of anything done by Acme pursuant to the provisions of, or in furtherance of this Agreement.
        3. In addition to Clause 1.1.2, no action or proceedings arising out of, or related to, the Services and/or this Agreement may be instituted against Acme by the Customer more than 1 year after the cause of action relating to such claim or legal action arose.
      2. Indemnity
        1. The Customer hereby indemnifies Acme and Acme’s Associates from and against any loss, damage, liability, claim, expense, costs orders or demands which may be suffered by or may arise as a result of anything done by the Customer, save as a result of Acme’s unlawful conduct, wilful misconduct and/or gross negligence.

    The difference is pretty stark although the question now becomes whether this revision has the desired effect: protecting my client and limiting its potential liability as much as the original clause while improving the clause’s legibility and intelligibility.

    I think the revision does achieve what I set out to achieve but we lawyers can’t afford to rest on our upholstery. The law changes pretty quickly and so do drafting conventions. We have to keep iterating with our contract language or we risk falling foul of legal requirements like plain language requirements or opening holes in our clauses’ contractual protections. This sort of work is ongoing and I think it also reveals how seemingly plain language requirements are not always easily met.


    Photo credit: Contract by nyello8, licensed CC BY 2.0

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