8 Habits of Highly Defective Contracts
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The document discusses 8 habits that can lead to defective contracts: 1) Creating contracts lazily without proper planning, 2) Focusing on potential problems too late, 3) Prioritizing less important details over critical terms, 4) Approaching negotiations with a win-lose mentality rather than cooperation, 5) Using unclear language that could cause misunderstandings, 6) Not involving the right stakeholders, 7) Focusing too much on methods rather than desired outcomes, and 8) Making the contract about the needs of one party rather than a mutually beneficial agreement. The key to an effective contract is building trust between parties.
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8 Habits of Highly Defective Contracts
- 1. 8 Habits of Highly Defective Contracts Sarah Fox
- 3. Tip: Create contracts that work for your business
- 4. Begin with a Bad End in Mind
- 5. Tip: Define what success looks like
- 6. Put First Things Last
- 7. Tip: Focus on the most important aspects for your client
- 9. Tip: Prefer terms which build trust
- 11. Tip: Write your contract in plain and simple language
- 12. Silo-ize
- 13. Tip: Work as a team to achieve agreed aims
- 14. Blunt the Saw
- 15. Tip: Focus on results not methods
- 16. Shout About You
- 17. Tip: Treat your contract as a way to inspire or help someone else
- 18. An effective contract is about trust not terms “Trust is the highest form of human motivation. It brings out the very best in people” Steven Covey, 7 Habits of Highly Successful People
Editor's Notes
- 1. Use Contracts Lazily As a contract is a tool to help you do business, why do most businesses get embarrassed about their contracts and treat them like a hurdle to be overcome? Why copy them from the internet, or hide them in a drawer? Effective contracts help you sell your business, your products/services, your skills, and your passion to those who need them.
- 2 Begin with a Bad End in Mind Many terms in defective contracts focus solely on what will happen when things go wrong – how disputes will be resolved, complaints handled, liability limited, or risks insured. Of course your business needs protection, but the best protection is to begin by knowing what a successful project looks like. Unclear expectations about what success looks like will result in disputes.
- 3. Put First Things Last Defective contracts focus 80% of their content on the minutiae of transactions – definitions, addresses, notices and so on – rather than spending 80% of their content on the important things. What your client really wants to know is what you are doing, why, how, when and for how much money. If your client can’t read your contact and understand it within seconds, then your focus is wrong.
- 4. Think Win/Lose For the last 150 years, the English courts have intervened in contracts to redress the balance when merchants started to take advantage of naïve consumers. Regrettably, this is still happening today. Defective contracts read like the instructions for winning a battle, not the map for a journey to be travelled together. But collaboration and trust is the key to successful contracting.
- 5. Seek Misunderstanding Too many contracts are excessively long and irredeemably complex. They are written by (or copied off) lawyers to be read by lawyers (or misread by non-lawyers). If your contract cannot be understood then it cannot be effective as no-one can carry it out. You need to see your contract through your client’s eyes.
- 6. Silo-ize Defective contracts assume that there are ‘sides’ and each ‘side’ has to protect its own interests. Effective contracts combine the strengths of both sides to produce an even better result. They involve clients in deciding the solution to their own problem, rather than imposing your ideas.
- 7. Blunt the Saw Defective contracts seek short-term profits at the expense of long-term relationships. They stoke mistrust, create conflict and are unsustainable. An effective contract grows with the partners and the project, encouraging them to share ideas and improve the project for both their benefit.
- 8. Shout About You Those who enter into, seek and enforce contracts for their own selfish aims are not clients you should do business with. Their defective contracts do not help you, they merely help your ‘partner’. But contracts are, and should be, about inspiring and helping each other. What people say about you (your brand) depends not just on how you write your contract, but how you use it.