Key Takeaways
- Unreadable contracts quietly erode value long after they are signed.
- Poor readability drives delays, disputes, and misalignment across the contract lifecycle.
- Designing contracts to be readable is one of the fastest ways to improve commercial outcomes.
Contracts are meant to enable business. Yet for many organizations, contracts slow deals down, create friction, and introduce avoidable risk, not because the law is wrong, but because the documents are unreadable.
Unreadable contracts don’t fail loudly. They fail quietly. They sit unopened. They are skimmed instead of understood. They are implemented inconsistently, debated endlessly, and revisited only when something goes wrong.
When we talk about contract performance, readability is often treated as a secondary concern. In reality, it is foundational. If people cannot easily read and understand a contract, everything that follows, negotiation, performance, and enforcement, becomes harder and more expensive.
This is precisely why Contract Nerds recently launched its new column, Readable by Design, to explore how readability is reshaping the way modern contracts are drafted, negotiated, and used.
Unreadability Is Not Neutral, It’s Expensive
Across industries and jurisdictions, research consistently shows that complex legal texts create uncertainty, slow decision-making, and suppress value. At a systemic level, unreadable regulation has been shown to reduce economic efficiency. At a commercial level, unreadable contracts produce the same effect inside organizations.
Decades of empirical research into contracting practices show that poor contract quality, including ambiguous language, unclear scope, and dense drafting, leads to material value erosion, often approaching 9% of annual contract value. This loss is not hypothetical. It appears in delayed projects, unclaimed entitlements, strained supplier relationships, and preventable disputes. In fact, most organizations are unaware of the ‘friction tax’ they pay on every document. You can actually calculate your own organization’s friction cost to see how much productivity is being lost to unclear drafting.
Crucially, these losses are rarely driven by “legal risk” in the narrow sense. They are driven by misunderstanding. Unreadable contracts:
- Increase negotiation friction
- Obscure key business commitments
- Shift focus to defensive clauses instead of commercial objectives
- Undermine trust between parties.
Traditional legal drafting conventions actively work against comprehension, even when everyone at the table has good intentions. Long blocks of text, inherited formatting conventions, and one-size-fits-all structures often undermine comprehension, not because of bad intent, but because “standard” drafting has prioritized habit over usability.
In contrast, applying basic design principles to contracts (such as audience awareness, structure, and visual clarity) has been shown to transform contracts from dense legal artifacts into practical tools that support understanding, trust, and execution.
Where Contracts Really Break Down: After Signature
One of the most persistent myths in contracting is that most problems arise during negotiation. In reality, the greatest value loss occurs after the contract is signed, during performance and management. This is where unreadability does the most damage.
When scope, responsibilities, and goals are buried in dense prose or fragmented across clauses:
- Teams disagree on what was actually agreed
- Change management becomes reactive and contentious
- Obligations are missed not out of bad faith, but confusion.
Unclear scope and objectives are consistently identified as leading sources of disputes and disrupted relationships, not because parties intend to disagree, but because the contract fails to communicate clearly what success looks like.
Readable contracts change this dynamic. They make expectations explicit, navigable, and usable at the moment decisions are made, not just when lawyers are involved.
Why Readability Is Becoming Non-Negotiable
Pressure to improve contracts is increasing across legal, procurement, and commercial teams. Organizations are being asked to move faster, automate more, and support the business more directly, all while managing risk. But automation does not solve unreadability. It amplifies it.
If unreadable language is embedded into templates, automation simply reproduces confusion at scale. This is why readability is emerging as a design discipline, not a writing preference.
Readable contracts are:
- Structured around how people actually use them
- Written to support decisions, not just interpretation
- Designed for implementation, not just signature
Readability is no longer just a best practice; in many jurisdictions, it is a legal requirement. In the United States alone, nearly 500 statutes and regulations mandate the use of plain language in contracts and contract-related documents, including notices, disclosures, and consumer-facing terms.
This shift was formalized at the international level with the release of ISO 24495-2 in August 2025, which establishes plain legal language as a global benchmark for legal and contractual drafting. Under this standard, clarity is not limited to word choice; legal documents must be relevant, findable, understandable, and usable for their intended audience.
Contract readability is not merely about improving user experience or speeding up negotiation; it is increasingly about regulatory compliance and risk management.
From Insight to Action: Three Ways to Improve Readability Now
For teams looking to turn readability into measurable impact, three actions consistently deliver results:
- Redesign for the Reader, Not the Drafter
Start with the people who must use the contract after signature. Reorganize content so obligations, scope, and decision points are easy to find and understand. - Focus on Post-Award Use Cases
Ask how the contract supports delivery, change, and governance. If the answer is “it doesn’t,” readability is already failing. - Treat Readability as a System, Not a Fix
Templates, standards, visuals, and structure must work together. One plain-language clause cannot compensate for a poorly designed document. - Quantify the Opportunity
Before starting a redesign, measure the baseline. Using a Cost of Unreadability Calculator allows you to turn abstract ‘confusion’ into a business case that leadership can actually bank on.
As readability becomes both a business need and a legal imperative, legal teams need repeatable ways to apply it at scale. Checklists, standard operating procedures, and skills-building programs help make contracts more readable, without turning legal drafting into a design exercise for its own sake.
One practical starting point is a readability checklist that helps contract managers and legal teams systematically identify common issues when drafting, reviewing, or improving contracts
Conclusion: Readability Is a Competitive Advantage
Unreadable contracts are not inevitable. They are the product of habits, incentives, and outdated assumptions about what legal rigor looks like.
When contracts are hard to read, organizations lose time, revenue, and trust. When contracts are readable by design, they move faster, perform better, and support stronger relationships.
And for modern legal teams, it is quickly becoming non-optional.
The post The Hidden Cost of Unreadable Contracts: Why Readability is Now a Business Imperative appeared first on Contract Nerds.