How To Spot Legalese In Contracts

We’ve all heard that contracts are necessary for every business deal. But what exactly is a contract, and how do you spot one? There are many types of legal documents that you can use in your business. However, if your agreement contains some or all of the elements below, it’s likely a contract and you need to be aware before signing on the dotted line.

How to Approach a Contract Law Fact Pattern – YouTube

Takeaways
1. Understand the Importance: Legalese is common in contracts, but deciphering it is crucial to ensure clarity and avoid misunderstandings.
2. Familiarize Yourself with Legal Terms: Learn common legal terminology to identify specific phrases that may be confusing or ambiguous.
3. Break Down Complex Sentences: Dissect lengthy and intricate sentences to pinpoint their individual components and meanings.
4. Seek Professional Assistance: If unsure, consult legal experts or resources to gain insights into complex contract language.
5. Pay Attention to Repetition: Repetitive phrases or terms can signal the presence of legalese that requires closer examination.

Table of Contents

1. Verb

Let’s start with a few definitions. A verb is a word that shows an action, but it can also show the state of being of an object or person. Verbs are the most important part of a sentence; they tell us what the subject did or is doing. They show action and movement, which makes them perfect for describing contracts!

In contracts, verbs are important because they let you know what kind of contract you’re looking at: do they have some sort of legal force? Are they binding? Are there penalties involved if you don’t fulfill your end?

Do this now: go through your home and look at all the documents in your life your mortgage agreement, credit card agreements, etc. and see how many times “will” appears somewhere on each page (it should be more than once).

The reason why will appears so often is that lawyers like to use it as much as possible when writing contracts because it makes things sound official and binding without actually being legally binding!

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2. Definitions

The second type of legalese is what you may think of as the dictionary definition. If a contract defines a term that you don’t understand, it’s usually legal jargon, so there’s no need to worry about it too much. However, if your eye catches something like “Governing Law” or “Merger and Acquisition,” chances are good that it contains some legal jargon that requires attention.

An example would be something like “Capitalized terms used in this Agreement shall have their respective meanings assigned to them.” This sentence is essentially saying: “The words ‘this’ and ‘agreement’ have specific meanings that will be discussed later in this document.

While these words might not mean anything on their own (other than being simple nouns), they become more important when combined with other phrases such as “this Agreement” or “the parties hereto.” It’s being used as an introduction at the beginning of an article or document before going into more detail about what those terms mean.

3. Pronouns

Pronouns are words that stand in for nouns. They can be possessive pronouns (e.g., “its”), reflexive pronouns (e.g., “myself”), reciprocal pronouns (e.g., “each other”), or indefinite pronouns (e.g., “all”).

To spot these types of legalese, all you need to do is look out for a pronoun that could be replaced with a noun (or even an entire clause). If you see something like this:

“Each party shall retain all rights in its respective intellectual property.”

…it’s likely that the word “its” could be removed and replaced by the name of whichever party owns the property in question, such as Apple or Microsoft or Amazon, or just deleted entirely because it adds nothing useful to your understanding of what is happening here.*

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4. Specification Of Time Periods

Another indication that you’re dealing with legalese is the use of ambiguous periods. If you see a bunch of phrases that describe periods without explicitly stating what they mean, then that means there are some major ambiguities in the contract.

For example, if a contract says “one week” or “two months” without specifying whether that means calendar weeks or business weeks, then it could be referring to two actual days!

Another example would be if a contract says “you must perform this task within one year after signing this agreement.” This could mean either 365 days after signing (or 366 if leap year) or 12 months from now but which?

5. Use of the Terms “Party” and “Parties”

The word “party” is used to refer to one person, such as a company or an individual. Similarly, the plural form of “party” (“parties”) is used when more than one person is involved in the contract. If a single party signs the contract on behalf of multiple parties, then all parties must appear on the document so that they can be bound by its provisions.

If you see the term “party” used where it should say “parties,” or vice versa, this could indicate that your document isn’t written correctly and needs to be modified before you sign it.

This can sometimes lead to confusion over whether or not certain provisions apply only to certain individuals within an organization; if possible, try to avoid this situation altogether by having everyone involved review documents before signing them so that there aren’t any problems later down the road!

6. Use of the Term “Extent” (or Similar Words)

The word “extent” (or similar words) is often used in legal documents and contracts. This can be because the person who wrote the document did not know what else to say, or because they were trying to use a vague term that could mean many different things.

In this case, when you see this word or phrase, ask yourself what it means in the context of the rest of your agreement. What exactly is being referred to? What are they trying to say?

If you think someone has misused this word or phrase as an attempt at legalese, feel free to point out why that’s inaccurate and explain how something better could be written instead.

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7. Specific Payment Amounts

You can also look for specific payment amounts. These are red flags because they’re often used to hide the real price or cost of a service. For example, if you see that a contract says you will pay $100 for something and then specifies hourly rates (or other rates) for how much you’ll be charged if that $100 is exceeded, this usually means there’s some sort of hidden fee.

8. Multiple, Long Lists

Long lists are an easy way to spot legalese.

Lists of items: if you see a list of items, be on the lookout for any words like “including,” “for example,” or “included but not limited to.” These words can make the list very long and give it more power than necessary. For example: “The services we provide include (but are not limited to) …”

Lists of requirements: if there is a list of requirements in your contract (such as “you must meet these conditions”), read them carefully and make sure each one makes sense for your situation and that it’s not missing anything important.

You should also ask yourself whether all those requirements are necessary or whether they’re just being used as padding for lawyers who need to fill up space. For instance:

You must provide us with full disclosure about all past criminal convictions.” This sounds great until you realize that this is extremely unlikely because most employers aren’t going to check new hires’ criminal convictions anyway!

Lists of conditions: If you see any kind of conditional statement (such as “If X happens then Y will happen” or “In case Z occurs”), keep an eye out for those same words at the end X may cause Y; Z may arise; etc., which would mean your contract could be void under certain circumstances without even having been designed correctly in the first place!

9. Adverbs in Long, Complex Sentences

Adverbs are words that modify verbs, adjectives, and other adverbs. They often describe how an action is performed (for example: slowly) or the timing of an action (for example yesterday).

The use of too many adverbs can cause a sentence to become long and complex. If you see multiple adverbs in one sentence, this might be a sign that your contract contains legalese.

If you’re unsure whether something is legalese or not, ask yourself whether it could be written more clearly with fewer words.

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10. Negatives in Long, Complex Sentences

In the following example, notice how the use of negatives makes the sentence longer and more complex:

You must not do X.
You must not do X under any circumstances.

In this example, it is clear that we are only talking about one rule you cannot do X but we have used two negative words to make sure there are no misunderstandings as to what exactly we mean by “do not”: don’t and any.

We could have also said don’t ever or never. These all express a similar idea but with slightly different nuances (“never” implies a strong commitment; “ever” implies potential exceptions). In general, when you see multiple negatives in a sentence like this one (not just two), you can assume that whatever follows will be very specific and absolute.

11. Formal Or Legal Terminology (For Example, “Utilize” Or “Herein”)

Here’s a short list of words that may be legal or formal:

“utilize”
“herein”
“hereunder”

These are all perfectly fine terms to use in contracts, but they’re not necessary for everyday conversation. Lawyers and other people who make their living drafting contracts do tend to use a lot of these words because they want the contract to sound more formal than it is.

A contract is still valid if you remove these unnecessary words from its text the meaning won’t change.

12. The Use of Numbers for Bullets, Sub-Sections, Paragraphs, etc (e.g. 1.2.3)

Numbers aren’t only used for the main clauses of a contract. They can also be used to delineate sub-sections, paragraphs, and bullets (e.g., 1.2.3). This means that any time you see numbers in your document, there is likely an indication of how long it should be or how many items there are in the list you’re reading through at that moment.

13. The Length Of Sentences And Paragraphs

You can tell a lot about the quality of your contract from the length and complexity of the sentences. Are they long and complicated? If so, this could mean that the contract was written by an overly verbose lawyer who didn’t take time to check for clarity or readability.

The same goes for paragraphs: if they are long, this could indicate that your lawyer wanted to make sure you understood everything (which is good), but it also may mean that he or she just wanted to show off how smart he or she is (not so good).

If you’re having trouble understanding what you read in a contract because it’s too wordy or confusing, ask yourself if this happens consistently throughout the document or just in certain sections.

14. The Length Of A Contract As A Whole

As with almost everything in life, length is not an indicator of complexity. The length of the contract does not indicate its importance or usefulness to you.

A very long contract is often used as a scare tactic to get you to sign away your rights by intimidation; however, many short and simple contracts contain no less legalese than longer ones.

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15. Useless Information (e.g., “This Agreement shall be governed by the laws of [Jurisdiction]”)

The purpose of the law is to protect citizens from harm, such as theft and fraud. The purpose of a contract, on the other hand, is to facilitate trade between parties who are both willing participants in an agreement (usually with mutual benefit).

A standard contract will include certain information that’s required by law or by industry standards. In other words: the things that matter most in a legal context aren’t necessarily those that matter most when making a deal.

When you’re agreeing with someone else whether it’s buying a house or agreeing to purchase goods and services you should be able to trust them to follow through on their end of the bargain.

But if they can’t be trusted because they’ve lied about something important related to their ability to perform under an agreement (such as having enough capital), then they’ll probably default on their promises anyway! And if this happens often enough over time then soon enough no one will want anything does business with them anymore… so yeah.”

Conclusion

If you’re not sure whether something is legalese, ask yourself if the sentence could be written more simply and clearly. If it can be, then it probably shouldn’t be in there at all!

FAQs

How can I improve my ability to spot legalese in contracts?

Understanding legalese takes practice. Start by familiarizing yourself with common legal terms and their meanings. Resources like legal dictionaries and guides on deciphering contracts can be very helpful.

Are there online tutorials for learning about contract fundamentals?

Yes, you can find online tutorials that cover contract law and its fundamentals. One such resource is the Contract Fundamentals Part 2 tutorial provided by the University of New Mexico.

What strategies can I use to review contracts more effectively?

To review contracts effectively, break down the document into sections, identify key terms, and seek clarification on any unclear language. Additionally, consulting legal professionals or resources that explain contract terms can enhance your understanding.

Are there any tips for negotiating contracts that contain legalese?

Absolutely. When negotiating contracts, make sure you comprehend all terms and clauses. If you encounter complex language, don’t hesitate to ask for explanations. Seeking legal counsel or referring to guides on contract negotiation can empower you during the process.

Costantine Edward

Costantine Edward is a digital marketing expert, freelance writer, and entrepreneur who helps people attain financial freedom. I’ve been working in marketing since I was 18 years old and have managed to build a successful career doing what I love.