ConstructionPro Week, Volume: 2 - Issue: 2 - 01/11/2013

Does ‘Plain Language’ Terminology Enhance the Enforceability of Contract Clauses?

By Bruce Jervis

In an industry which makes such extensive use of contractual documentation, some complain of obtuse or arcane legal terminology. A recent court decision in Ohio suggests that the use of plain language is more than just considerate. It may affect the enforceability of the contract clause itself.

A payment clause in a subcontract stated that payment by the project owner to the prime contractor was a “condition precedent” to the contractor’s obligation to pay the subcontractor. This is clear, longstanding legal terminology. It means an event which must occur before a legal obligation arises. Subcontract payment clauses containing this term have generally been enforced against subcontractors.

The Ohio court ruled, however, that the “condition precedent” terminology alone was insufficient to shift the risk of owner nonpayment from the contractor to the subcontractor. It was unclear whether the subcontractor understood the severe consequences of the expression. In order for the clause to be enforceable against the sub, there also had to be a plain language statement that the subcontractor accepted the risk of owner nonpayment and had factored that risk into the subcontract price.

In fairness, there has been significant improvement in writing contracts in plain language. Tedious recitations replete with Latin phraseology are a thing of the past. Yet the Ohio court decision suggests that the plain language movement is still incomplete. Do you encounter legal terminology with implications that are uncertain or confusing? Are you comfortable working with common industry contract documents without the advice of legal counsel? I welcome your comments.

COMMENTS

As an English major and LEED Green Associate, I have heard from engineers, scientists, GCs, proposal departments, project managers, and others -- simple, clear language is something that is sorely needed. Past, present, and future. (I have not dealt with contracts, legal issues, or court decisions.) I hearken back to the KISS principle -- keep it simple, stupid. I would tend to agree with Ohio -- the "plain language movement" is/should be ongoing and continuous.
Posted by: Lisa Speak - Friday, January 11, 2013 11:14 AM

In writing my specifications or plan notes I keep short and to the point and I never use the words such as could, may or options etc. I make it clear to the point, however you better be sure what you are writing is accurate.
Posted by: Gary Munguia - Friday, January 11, 2013 12:57 PM

Must we assume the reader does not have an education or a lawyer on retainer? Come on man!
Posted by: Denis Herrmann - Friday, January 11, 2013 1:00 PM

It clearly takes contract language that all parties understand to achieve a true meeting of the minds.

What is the citation for the Ohio plain language pay-if-paid clause to which you referred?

Posted by: Bill Stack - Friday, January 11, 2013 1:01 PM

I am a LEED Green Associate and a published author and at time I have difficulty understanding the language in GC contracts. Colorado also has a "pay if paid" clause, but this is frequently obscure in some of the contract language that I have seen. We have an attorney review all of our contracts for this reason. In my view, the plain language movement is a good thing and should be continted and even expanded. There is no reason that a contract cannot be written in easy to grasp language without using Latin or any of the "legalese" that now exists.
Posted by: Fred Wellers - Friday, January 11, 2013 1:31 PM

I am a general contractor for residential construction. I started writing my own contracts 8 years ago in simple language. It has made my success at getting homes to build just because the owners can understand what the contract is stating. I did this without any help from a lawyer. I build on cost plus construction and all my clients must write out the checks to the sub-contractors. This allows the owners to have a lot of control over what is acceptable for a finished product. This also makes the subs to a far better job because they know that the check is not ready until the job is done. This keeps the punch list down to nothing and the job is finished sooner than later. We only build houses that are being financed by a bank to protect not me but the subs with lien rights here in Texas. Simplify your life and your contracts.
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