Presentation and workshop on how to draft contracts that the users actually understand. Perspectives form two small countries that have had to limit transaction cost and with a contracting culture different from the Anglo American tradition. Given at the International Technology Law Association’s European conference 20 October 2017 by attorneys Kristian Foss and Carmen De la Cruz

2. Contracts 2.0 - Simple, Visual and
Understandable: Dawn of a New Era?
Itechlaw conference Stockholm, 20 October 2017

3. Perspectives
from
a small country
(Norway)
Kristian Foss

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

17. Happy drafting!
kristian.foss@bull.no

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