I Own a Business in England. Why Are My Company’s Commercial Contracts So Lengthy?

You may wonder why your commercial contracts are long as a business owner. Your company engages in many commercial activities with clients, suppliers or partners. The commercial contracts covering these arrangements will differ to best suit the deal struck. Due to the importance of accurately recording deals and ensuring your business does not sign up to detrimental terms, you will likely strongly negotiate your commercial contracts.

This article will explore why commercial contracts tend to be so detailed and lengthy so your business knows what to expect in future commercial deals.

Importance of Writing Commercial Contracts

Aside from a few exceptions, there is no legal requirement for most commercial contracts to be written. Instead, many commercial arrangements can be agreed upon verbally. However, agreeing to a high-value deal with another party on a purely verbal basis is risky. Many business owners prefer written legal agreements because they offer various advantages, including:

• certainty as to the contents of the deal;
• evidence of the parties’ agreement (through their signatures); and 
• parties are likely to seek legal advice before signing a contract compared to a spontaneous verbal agreement.

One of the most commonly asked questions concerning written commercial documents is why they tend to be so long. Let us explore some common reasons below.

1. Need for Certainty in Contracts

One of the main points of a commercial agreement is to fully and record the key terms the parties agree to. With more detail and information comes more words. Let us look at a quick example in which your company agrees to supply ten computer monitors per month to a rapidly expanding business in the local area.

2. Covering Legal Requirements 

Some types of commercial contracts require parties to confirm specific details. For example, if a document relates to the hiring of a commercial property, you should give full details of the address and location of that property within the relevant contract. Failure to meet the necessary legal requirements may render the contract invalid or unenforceable.

3. Impact of Negotiations on Contracts

Many business contracts are the result of a compromise between the parties. If one company is desperate to add specific wording, the other may take advantage of the opportunity to add an extra clause themselves in exchange for their agreement. Generally, negotiations result in more clauses and wording rather than less, hence a longer contract.

4. Use of Legal Terminology

The final reason is the use of legal language. Legal terminology tends to be lengthy and detailed.  This is because a legal contract clause eliminates any doubt about the commercial deal’s purpose and parameters. This is crucial because, in the event of any future dispute between the parties, an impartial individual may need to interpret the limits and intention of the contractual wording. Courts do not enjoy vague wording and, instead, welcome clear, detailed contractual obligations.  

Key Takeaways

Overall, commercial contracts exist with the primary aim of providing certainty to the parties by way of explicit language. Furthermore, they avoid future arguments about their meaning or purpose. To achieve this, the parties must avoid vague wording and focus on recording the commercial deal within key clauses. Realistically, unless the contract covers a straightforward commercial agreement, you should expect it to be long.

If you need help drafting or negotiating commercial contracts, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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