Have SMEs become slaves to their contracts?
Without our noticing, our world is being overrun by contracts. Rather like weeds, they spring up in every corner. Some are so invasive that at times the only way to be rid of them is to break things off entirely. We have all had the personal experience of having to read an interminable, incomprehensible contract and curse those "wretched footnotes". The situation can even take on a somewhat absurd quality. A YouTuber took on the challenge of reading the terms and conditions of Amazon's Kindle — more than 73,198 words spread across more than 190 pages. As the website Hitek reports, "it took him 8 hours and 59 minutes to read the contract from start to finish!" This compulsion to contractualise everything, which is often accompanied by rampant red tape, is today hitting the business world full force and has something particularly damaging about it for professional relationships — and here is why.
Inequality before the "contract"
This is a Hollywood classic, well illustrated by cult films such as The Pelican Brief or The Firm: large delegations of law firms mandated to defend major corporations in the cases in which they find themselves embroiled. Sometimes the disproportion is striking — the plaintiff standing alone against the defendant deploying an entire cohort of lawyers. This David and Goliath scenario is, alas, becoming less and less of a caricature. Let us acknowledge it: SMEs are not equipped to face these armadas that devote their time to rewriting contracts. On the other side, the small company without the means finds itself in complicated situations, being unable to manage the layers of complexity being imposed upon it. This can obviously come at a cost. Because if it wants to hold its own, it must in turn employ specialists whose fees sometimes exceed the profitability of the cases at hand. The result is a double-standard situation that generates a perfect form of inequality — not before the law — but before the contract. This situation is becoming increasingly prevalent between commissioning parties — major industrial players — and their subcontractors; and let us acknowledge that this has the consequence of seriously harming the quality of client relationships and the development of business.
The permanent growth of contractual risk
The increasing complexity described above, in addition to generating inequality, can be a source of genuine danger. Imagine a company that has no in-house legal department and has signed a contract with an industrial partner which — being well-equipped — regularly proposes modifications and updates to the agreement. These updates, moving towards ever greater complexity, end up creating more and more uncertainty. Because even if the aim of the agreement is to cover every eventuality, the length and technical nature of the text will inevitably make the collaboration increasingly opaque. The result will be a total lack of transparency that will put one of the two partners at risk. If, as the saying goes, "ignorance of the law is no excuse", it is equally necessary that the text signed by both parties be clear to each of them — to ensure that no trap has been set and that all aspects can be managed on both sides. Yet, inadvertently and unknowingly, through misunderstanding, a situation of contractual breach can arise quickly. In such a case, it is highly likely that the contract will be terminated, which will inevitably cause damage — all the more so since it can have repercussions on the reputation of the partner concerned. One can even imagine the worst. Some companies will never recover. Proof, if any were needed, that the contract does not solve everything.
Fewer countersigned documents, more "words given"
If there is one tradition that is dear in a country like ours, it is the ethic of the given word. With the galloping contractual inflation that is now affecting us in turn, one finds oneself longing for that virtuous era and wishing that contractual madness would pause and return to essentials. A sound contract should fit on a single page and be readable by all. It would contain the indispensable elements: the deliverable, confidentiality rules, intellectual property management, and billing terms. This kind of document would complement the code of obligations and allow for even greater credit to be given to the relationship of trust, generating a win-win situation. In any case, it seems essential to us that the text be readable by the decision-makers without the presence of their lawyers. Collaboration will inevitably be strengthened as a result. A point of view that the author of The Spirit of the Laws would undoubtedly have approved: "Useless laws weaken the necessary ones." (Montesquieu)
