How Standardized Contract Language Reshapes Legal Practices

By Alyssa Verzino

AdobeStock_421267742The process of drafting and negotiating contracts isn’t always a smooth one. When language is inconsistent from one draft to the next, keeping up with deviations and their intended meanings can quickly become both frustrating and time-consuming. Standardization has become a common solution for a variety of issues, but what exactly does standardization in contracts mean? Today we will provide a brief overview of what it means and - more importantly - how it can ultimately transform legal practices for the better. 

What Is Standardized Contract Language?

Contractual language should be as straightforward as possible. By definition, standardized contractual language is a set of terms within a contract template that create consistency and make deviations from original clauses easier to spot in the negotiation process. With standard language, you know what you’re getting into from the beginning, and you can rely on certain clauses to hold. 

Standardized language usually exists in the form of contract templates, allowing contracts with similar objectives to share specific language. With the help of contract management systems, companies can efficiently enforce standardized language with automation: Creating consistency, maximizing efficiency, and minimizing ambiguity. 

Contracts can’t always be simple (they often won’t be) but standardization helps eliminate a variety of complications where contract language is concerned.

How Does Standardization Transform Legal Practices? 

Whether it’s wasted time and money or the threat of serious litigation, no problem should be disregarded. Here are some key issues that standardization helps address. 

Ambiguity: Unclear language has the potential to cause much larger issues down the line. Standardized language helps establish clarity before negotiations, rather than after. 

Unclear Outcomes: When a contract is entirely unique in its use of language, it is difficult to know how its terms will hold up in court. As more contracts begin to use standardized language, you can separate the terms that work from the ones that don’t. 

Regulatory Compliance Violations: When a contract is drafted entirely from scratch, it raises the possibility that an obligation will be missed, leaving the organization vulnerable to penalties and fines. Standardized templates avoid this issue by including the language necessary for compliance from the start.  

In addition to preventing these issues, we are learning new benefits to standardization as a result of expanding capabilities of contract management software. Automation technology and standardization go hand in hand, giving companies the ability to streamline processes across the organization and making their overall practice more efficient. 

Standardized language is also uniquely effective in risk mitigation. Having ready-made templates reduces the risk of compliance violations, and prevents troublesome ambiguities in contractual language.  

Contract Management Software Enhances Key Benefits 

Modern contract software centralizes all processes and automates tasks that once consumed hours of manual review and input. Using this technology makes it easier to enforce standard language by calling out deviations automatically. By instantly noting where deviations and inconsistencies occur, automation turns standardization from a great idea in theory to a viable solution in practice.

Standardizing contractual language is a reliable way to remove a significant layer of complication from the drafting and negotiating process. From risk mitigation to enhanced productivity, the benefits are impossible to ignore. If you’re looking for a contract management system to deliver these benefits (and many more) check out this eBook about how to effectively evaluate different solutions. 

And, don’t forget to subscribe to the LinkSquares blog for more business resources like these for legal leaders like yourself. 

Topics: Contract Language

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