a good test to use when reviewing contracts
In honor of Mother’s Day this coming weekend, I thought I would tell you that before you sign your next contract, you should ask yourself whether my mother would understand it. If the answer isn’t yes, then you shouldn’t sign it.
A written contract only matters when a dispute arises and you can’t agree on how to resolve it. When that happens, you’ll need to show the contract to a third party and have them read it. That third party likely will be someone who hasn’t worked in your industry and isn’t familiar with its customs and jargon. More often than not, that third party will be a judge or jury. And who might be on that jury? My mom, who, just like the judge and the other jury members, probably won’t know the first thing about the subject of your contract.
You shouldn’t make it hard for a judge or jury to decide in your favor by signing a contract that is difficult or impossible for them to understand. That’s why you should think of my mother before you sign that contract. You should ask yourself whether she would understand the contract that you’re about to sign because she might be the person who ultimately decides any dispute that may arise.
Making sure that a contract spells out everyone’s responsibilities as clearly as possible will do more than just make dispute resolution easier: it may prevent disputes from arising in the first place. If the contract sets forth everyone’s responsibilities in a way that someone who doesn’t know anything about your business can understand, then you and the party that you’re planning to do business with will be on the same page about what you expect from each other. And agreements at the outset of a relationship often prevent disagreements from developing later.
So the next time you’re reading a contract, think of my mother—or yours—before you sign it.