Modifications to standard forms of contract: the impact on readability

Abstract

Lack of clarity in contract documents can lead to disputes between contracting parties. Standard form contracts have evolved due to construction business becoming increasingly complex and the difficulty in drafting bespoke conditions of contract for each project. Numerous advantages have been identified in using standard forms of contract. However, clients often modify some clauses in order to include specific requirements for a project. While the consequences of ill-modifications to standard forms have been researched, no study has been done on the impact of these modifications on the clarity and readability of the document. Using 281 modified clauses from large infrastructure projects implemented in Sri Lanka, this study found that on balance modifications generally make the document more difficult to read; 60% of the sample clauses were more difficult to read compared to 40% becoming easier. More than 50% of the original and modified clauses were still at the 'very difficult' level of readability, which requires the equivalent of post-graduate level to understand. The study contends that modifications have not resulted in improved readability. The study highlights the necessity of clear and plain language when modifying contract documents.

Causal Relationships of Readability Risks in Construction Contracts

“…Therefore, standard contract forms have been frequently used in the construction industry to reduce clarity and readability problems [30]. However, while adopting standard contract forms, various modifications in some clauses are made by clients to satisfy requirements of the projects [22]. Rameezdeen and Rodrigo [22] found that modifications to standard contract forms generally make the contracts more difficult to read.…”

“…However, while adopting standard contract forms, various modifications in some clauses are made by clients to satisfy requirements of the projects [22]. Rameezdeen and Rodrigo [22] found that modifications to standard contract forms generally make the contracts more difficult to read. All these considerations require a thorough analysis of risk factors affecting readability of construction contracts for smooth contract administration.…”

“…Koc and Gurgun [25] investigated and prioritized readability risks in construction contracts based on their dispute potentials related to time, cost and quality criteria. Rameezdeen and Rodrigo [22] examined the impact of modification to standard contract forms on readability, and asserted that more than 50% of the original and modified contract clauses were still difficult to read. Besaiso et al [2] compared the suitability of FIDIC and NEC standard forms in Palestine and addressed that NEC appears to be more capable than FIDIC to minimize disputes.…”

“…For instance, while decreasing the number of words, the structure of sentences could become more complex with grammatical errors [19], [20]. On the contrary, many scholars have also addressed that long sentences could make contract less readable [1], [21], [22]. Therefore, analysis of the most causal factors affecting contract readability is essential to improve construction contracts, which is the main legal instrument that connects various parties with a legal bond [23].…”

Significant Factors Affecting Civil Engineering Project Performance

“…R. Rameezdee et al [25] found that most of the problems in construction projects were related to the contractual behavior of individual key participants in the project. The contractual behavior of the key participants i.e delay in paying interim payment, late in giving possession, architect's behavior, adversarial relationship, poor communication are among other things that affect the project performance [26], [27], [28] and [29].…”