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The virtues of using industry-standard terminology in contracts

When you’re drafting a contract, you’ll want to try to avoid coining your own non-standard words or phrases to express technical or financial concepts. If there’s an industry-standard term that fits what you’re trying to say, use that term if you can. Why? For two reasons:

First, someday you may have to litigate the contract. You’ll want to make it as easy as possible for the judge (and his or her law clerk) and the jurors to see the world the way you do. In part, that means making it as easy as possible for them to understand the contract language.

The odds are that the witnesses who testify in deposition or at trial likely will use industry-standard terminology. So the chances are that the judge and jurors will have an easier time if the contract language is consistent with the terminology that the witnesses use—that is, if the contract “speaks” the same language as the witnesses.

Second — and perhaps equally important — the business people on both sides are likely to be more comfortable with the contract if it uses familiar language, which could help make the negotiation go a bit more smoothly.

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