Ensure that the contracting party understands the content of the contract

A contract is only truly effective if the other party also understands what they are signing. If the contracting party does not understand the content, the risk of disputes, non-performance, and litigation increases. And it is precisely the drafter of the contract who runs the risk: in the case of unclear or inaccessible wording, the other party may later invoke error, and vague provisions are generally interpreted to their disadvantage. The solution is not legal dilution, but clear language that preserves the legal value.

In short: make your most important agreements visible in advance, write them in plain language, and have the other party confirm that they have read the core conditions. Below, you can read why this is so important, what risks you run, and how to handle this concretely.

Why understanding on the part of the other party is so important

In practice, many people sign a contract without fully understanding its contents. Research into contract comprehension repeatedly indicates that a significant proportion of signatories find legal jargon difficult and do not read the general terms and conditions (in full). The picture differs by type of agreement: a simple purchase or lease agreement is generally better understood than complex documents with many legal clauses.

For you as an entrepreneur, that is no small detail. A counterparty who does not understand what they are agreeing to is more easily blindsided by the consequences, is less willing to pay, and is more likely to look for arguments to get out of the agreement. Understandable contracts reduce that risk and strengthen your position should a dispute arise.

What risks does the drafter of the contract face?

Lack of clarity in a contract often works to the disadvantage of the person who drafted the document. Two risks stand out.

Risk of invoking error

An agreement concluded under the influence of a misrepresentation of facts may, under certain circumstances, be annulled on the grounds of error (Article 6:228 of the Dutch Civil Code). This may arise, among other things, when the other party is mistaken due to information you have provided, or because information you should have shared was not accessible or insufficiently accessible.

The information you provide does not need to be perfect, but it must be sufficiently understandable and accessible. Piling up complex terms can impair that accessibility. If a misunderstanding is sufficiently serious and is related to unclear information on your part, this could, in the extreme case, lead to the annulment of the agreement.

Unclear provisions are interpreted against the drafter

In case of doubt regarding the meaning of a clause, the principle of contra proferentem: unclear wording is interpreted to the detriment of the party who drafted the terms and conditions. For agreements with consumers, this rule of interpretation is enshrined in law. In business relationships, it is not a strict statutory rule, but it does function as a strong tendency towards interpretation: if you write vaguely, you run the risk that the judge will choose the interpretation unfavorable to you.

Moreover, in the event of a dispute, the duty of disclosure of the disclosing party generally carries more weight in case law than the duty of investigation of the opposing party. Anyone who phrases important information unclearly or in a manner that makes it difficult to find will find it hard to hide behind this later.

What can you do yourself to increase understanding?

Fortunately, you have a great deal of influence on how understandable your contracts are. The trick is to combine accessible language with legally sound content.

• Write in clear, short sentences. Avoid unnecessary jargon and long legal sentences. Accessible phrasing should never compromise the legal value of the document.
• Explain the most important conditions in advance. Mention the weighty provisions, for example on the front of a quotation or order form, possibly in simpler wording. Include a clause in the general terms and conditions themselves clarifying that this explanation is merely for clarification and that the actual terms and conditions apply in full.
• Make the general terms and conditions findable and readable. Ensure that they are provided in a timely manner and are logically structured, with clear headings for each topic.
• Actively point out crucial clauses. Consider limitations of liability, payment terms, notice periods, and penalty clauses. The more explicitly you point these out, the stronger your position.
• Have the other party confirm where necessary. A brief confirmation that the key conditions have been read and understood reduces the scope for later disputes.

Clearly readable contracts are therefore not a marketing trick, but a form of risk management. Are you unsure whether your documents are legally sound and at the same time understandable? Then have them reviewed by a lawyer who thinks along with your business. Our specialists in contract law can assist you with this.

Step-by-step plan: how to ensure the other party understands the contract

If you want to arrange this properly on a structural basis, follow these steps before sending out an agreement.

1. List the key agreements at the top. Place the price, duration, payment terms, and most important obligations at the beginning in plain language so that they do not get lost in the fine print.
2. Translate jargon into plain language. Use everyday words and short sentences where possible; refer to the corresponding clause for legal precision.
3. Provide the general terms and conditions in a timely manner. Submit them in advance or at the latest upon conclusion of the agreement, not only on the invoice afterwards.
4. Explicitly point out burdensome clauses. Clearly mark limitations of liability, penalties, and notice periods, for example with a heading or a brief summary.
5. Record the consent. Request a signature or verifiable agreement (for example, a checkbox with a date) so that you can prove later that the other party was aware of the terms.

Practical example: an unclear payment agreement

Suppose you provide services on an invoice basis and include a payment term with a penalty for late payment in your general terms and conditions. The provision is worded so technically that a customer does not realize the penalty accrues after just a few days. If it comes to a collection process, the customer can argue that the agreement was unclear. In case of doubt regarding the interpretation, the drafter often ends up on the losing side.

If you had communicated the same agreement in clear language and visibly in advance, you would be in a much stronger position. If a payment does get out of hand, you can engage our debt collection process to recover your outstanding debt.

Frequently Asked Questions

Is a contract that the other party does not understand invalid?

Not automatically. In principle, a signature is binding, even if the person has not read the contents in full. However, misunderstanding combined with unclear or missing information can lead to a successful claim of error, rendering the agreement voidable under certain circumstances.

What does contra proferentem mean?

It is a rule of interpretation entailing that an unclear provision is interpreted to the detriment of the party that drafted it. In consumer contracts, this rule is established by law; in business relationships, it serves as a strong guideline for the interpretation of unclear clauses.

May I simplify my general terms and conditions without losing legal value?

Yes, provided it is done carefully. Clear language and legal soundness are not mutually exclusive. It is important that the content remains legally correct and that any explanations do not undermine the actual terms and conditions. A legal expert can check your terms and conditions for this.

Who must prove that the other party was aware of the terms and conditions?

In disputes, it is often examined whether the terms and conditions were made available in a timely manner and whether important provisions were sufficiently pointed out. The party relying on the terms and conditions would be well advised to have demonstrably arranged this. Careful documentation in advance prevents much discussion afterwards.

How do I demonstrably document that a customer has understood the contract?

Use a signature or a digital agreement in which the core conditions are briefly summarized, and retain the moment of agreement (date and version of the conditions). A brief confirmation that the key provisions have been read, combined with timely provision of the conditions, makes it much more difficult to cite misunderstanding afterwards.

Do you want clear contracts drafted or reviewed?

At MKB Juristen, we draft contracts and general terms and conditions that are legally sound while remaining understandable to your customers. This reduces the risk of misunderstandings and recourse to the doctrine of error, and puts you in a stronger position should a dispute arise.

• See how we help you with general terms and conditions.
• Read more about our approach to contract law.
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