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Is Your Contract Biased?

Updated: Feb 17, 2021

By Nada Alnajafi.

Contracts are documents reflecting agreements between people and companies run by people. As humans, we are all guilty of having implicit biases. That’s why, our implicit biases can often seep into our contracts. If we’re not careful, these implicit biases can cause us to communicate unintended (and sometimes offensive or unfair) messages to the other party that can put the contract and underlying relationship at risk.

Recently, companies, employers, and schools, are promoting the principles of diversity, equity, and inclusion in order to eliminate bias. Good companies have recognized the importance of eliminating common biases in the workplace. Customers are demanding heightened awareness from their vendors. Even in-house legal departments are expecting outside counsel law firms to align with these values. What are we doing to eliminate bias in our contracts, contract negotiations, and (by proxy) contract management tools? When was the last time you checked if your contract was biased?

Unfortunately, the legal community has done little to address implicit biases in contracts. But it’s never too late to start. In this article, I will address how to identify and eliminate implicit biases – such as language, gender, and resource bias – from our contracts.

1. Language Bias in Contracts

Language bias occurs when the contract drafter [1] assumes the other party is as fluent in English and English “legalese” as the contract drafter. This type of bias commonly appears in international contracts when one or more parties are not native English speakers. If you’ve ever thought this to yourself, “Wow, their English is surprisingly really good!” then you probably have implicit language bias. It’s ok; all of us have implicit biases to some degree. The important thing is that we recognize it and do something about it.

Throughout my career as in-house counsel, I negotiated hundreds of vendor agreements on behalf of clients residing outside the U.S. and with opposing counsel or counterparties from non-English speaking jurisdictions. The one common thread I noticed across all of these contracts is that they are always – 100% of the time – drafted in English.

“English is used in contracts around the world, not just contracts between companies from English-speaking countries.”[2] When the parties’ command of the English language differs, and the contract is drafted solely in English, the parties automatically start on uneven footing. Without a full grasp of the English language, how can the international party fully understand the contract or fully advocate for their client’s position? How can they fully deliver on your ask? And when the English-speaking party notices this inherent difference, is that knowledge used for good or trickery?

While many international parties are English savvy and can get by with the basics, the type of English used in contracts (as many of us can attest) is not always straightforward or intuitive. Sure, I can speak conversational Spanish and tell the Uber drive where I want to go. But that doesn’t mean I’m prepared to negotiate a contract in Spanish. Plus, even if you know conversational English, English legalese is arguably a language all its own!

To eliminate language bias from contracts, contract drafters should consider: 1) whether the contract should be in English, another language, or both, and 2) which language will govern if a dispute arises. In addition, we should implement these modern contract drafting principles into our contracts – not only because they will help eliminate bias, but also because they are regarded as general best practices.

  • Create a valid non-English translation of the English contract and consider using the non-English version as the primary contract, if suitable.

  • Use visual contracts that incorporate images alongside or even replace text – a picture is worth a thousands words.

  • Conduct the contract negotiation via email instead of phone to slow the pace and develop genuine understanding between the parties.

  • Replace English legalese with English plain language that even a non-native English speaker could understand.

2. Gender Bias in Contracts

Gender bias occurs when the contract drafter presumes to know a party’s gender preference implying that one sex or gender preference is the norm. This type of bias commonly appears in employment agreements, such as confidentiality and intellectual property agreements, offer letters, or termination letters.

In order to promote inclusivity in our business relationships, contract drafters should steer away from using gender-specific pronouns or language in contracts. In 2018, Thompson Reuters noticed an increase in the number of clients requesting gender-neutral documents. More and more, clients are expecting contract templates to create a path of least resistance, speed up contract negotiations, and align with their core values. How can we do that if we use incorrect pronouns that can offend the other party right off the bat?

The truth is, gender roles and pronouns have no place in contracts. They do not add any value to contracts, nor would elimination of gender-specific pronouns detract value from contracts. As the world moves towards gender neutrality, our contracts should, too.

To eliminate gender bias from contracts, contract drafters should:

  • Move away from third-person pronouns altogether. Instead, reference the parties’ names as defined in the contract. For example, instead of writing “his services” you should write “the Contractor’s services.”

  • Use gender fair or gender-neutral language throughout the contract. Until a gender-neutral pronoun is decided upon as a community, we should not be assuming that parties like one gender-neutral pronoun over another. For example, “they” is used as a gender-neutral singular pronoun in English, but not everyone likes it. In addition, courts have not yet ruled on the interpretation of “they” in a contract, which can be interpreted as either a singular gender-neutral pronoun or the plural pronoun referring to multiple people.

  • Don’t use a gender catch-all clause like, “Unless the context otherwise requires, a reference to one gender shall include reference to the other genders.” That only reinforces gender stereotypes.

  • Ask clients what their preferred gender pronoun is before entering into contract negotiations on your client’s behalf. This way, when you refer to your clients in a negotiation with external parties, you represent your clients the way your clients want to be represented. (See how I avoided using a pronoun in this sentence?)

3. Resource Bias in Contracts

Like contracts, contract lifecycle management (CLM) platforms are powered by humans to some extent. Many artificial intelligence (AI) algorithms are trained by humans. Contract templates offered by CLMs are drafted by humans. Therefore, our humanistic tendency towards bias can permeate the world of legal technology. If we let it.

In fact, access to such legal technologies is, in and of itself, a presumption made by those of us who are guilty of implicit resource bias. We assume that everyone can review contracts as quickly as we can. Every jurisdiction has legalized e-signatures. All companies leverage systems to help manage contracts better. Why do we make this assumption? Because we assume other parties have the same resources we do. And if they’re too slow or too disorganized, it’s their fault for not putting a better system in place.

Here’s a thought. What if the other party doesn’t have access to future forward tools? What if they don’t have the budget for it? How many times are you going to email them asking for an update before you realize that you’re not helping?

While adoption of CLM and electronic signature tools is on the rise in the U.S., that is not the case in many other countries. When dealing with international contracts and parties who don’t speak English, consider first whether the party’s response time is impeded by their lack of access to legal technology. Then, ask what you can do to help. Here are a few ideas.

  • Offer to create the final clean template for signature instead of asking the other party to do this. Finalizing a document is always easier when you have the right tools, like Word and Adobe, to create a clean document.

  • Expect more time for contract review, negotiation and execution. While you may be a part of the most state-of-the-art legal department with a 24-hour contract review KPI, that doesn’t mean the other party can keep up. To best manage this situation, practice some patience. If that is not possible because of an impending deadline, then offer to take on the next round of redlines or the bulk of the work.

  • Leverage your tools for their gain. Legal technologies are generally SaaS tools that are charged on a subscription basis per user. Most of the time, use of the tool by third parties (vendors or customers) is built into the pricing. For example, you can leverage your instance of DocuSign to obtain a third-party signature on a contract with paying extra fees.

Contracts are the medium by which human relationships, ideas, and expectations, are brought to life and maintained over time. Therefore, contract drafters need to be mindful of implicit biases that can arise in contracts, contract negotiations, and contract management systems. Eliminating implicit bias in your contracts will help you negotiate better contracts, forge deeper relationships, and promote the principles of diversity, equity and inclusion.

Notes [1] In the context of this article, “contract drafters” includes attorneys, contract managers, procurement specialists, or lay business persons – whomever is drafting and negotiating the contract at hand. [2] Kenneth A. Adams, A Manual of Style for Contract Drafting XXXV (4th ed. 2018).


About the Author:

Nada Alnajafi is an award-winning attorney with deep experience serving as in-house counsel for startups and public companies over the past 12 years.

She currently serves as Corporate Counsel for Franklin Templeton, a Fortune-500 global financial services organization. Previously, she worked in-house for Faraday Future, Lexus, and Concannon Business Consulting where she gained experienced in the automotive and tech industries.

Nada is passionate about leveraging the latest in legal tech to gain efficiencies in the contracts management process. With her dynamic legal and consulting background, she is more than just an attorney; she is a trusted advisor, business partner, project manager, creative problem-solver, and skilled negotiator.  In addition, Nada enjoys training contract negotiators on the ins and outs of contracts negotiations and redlining etiquette.

During the pandemic, Nada wanted to find a way to connect with other contract professionals and, as a result, she created Contract Nerds – the new home for everything contracts.

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