Contracts 2.0 simple, visual and understandable

Contracts 2.0 - Simple, Visual and Understandable: Dawn of a New Era?

Itechlaw conference Stockholm, 20 October 2017

Perspectives from

a small country (Norway)

Kristian Foss

An agreement...

• What is it?

• What‘s its fundamental function?

• Achievable without understanding it?

«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

Today’s world

• More transactions• Smaller transactions• More complex• More critical

• Reduce transaction cost

• Increase understanding

Today’s needs

How a small country has coped

• Small population

• Small transactions

• Complex subject matters

Standard form contracts

• Construction• Delivery industry• IT

Word count general terms

How to make it simpler?

• Target group

• Structure

• Language & length

Target groups• CEO?• CFO?• CTO?• Lower level techies and developers?• HR?

Structure

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 descriptionApp. 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 descriptionApp. 5b

App. 5a

2676 words

919 words

Agile method 2588 words

Language and length

• Choice of words - don’t try to impress

• Short sentences - max 25 words

• Instructive headings

• Break paragraphs into–Lists–Smaller paragraphs

• Size vs. coverage vs. word economy?

• The world works

Happy drafting!

[email protected]

© de la cruz beranek Rechtsanwälte AG

Contracts 2.0 – a Swiss perspective

Carmen De la Cruz, Attorney at Law

Diploma in IT & Economics


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

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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


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

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Technology Stack

Smart Contracts

Blockchain

Protocol of consent

P2P Protokoll

TCP/IP

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Contracts 2.0

Programmable?

Secured andself-executed?

Inter-disciplinary?

Shorter – fewerregulatory

requirements?

Standardizationof liability due to AI, IoT tec.?

Fewerresources?

Privileged & Confidential

Breakout (1): Contracts 2.0: a new era?

Breakout (2): Disputes 2.0: a new era?

Break-out sessions - 25 minutes


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


* 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


Feedback from break-outs

Plenary session - 15 minutes

Contracts 2.0 simple, visual and understandable

Law

Transcript of Contracts 2.0 simple, visual and understandable