Simplifying Your Contracts: What to Do About Definitions?
Definitions are essential for defining the scope of a contract and minimizing legal risks. But they can become a real headache for policyholders and consumers.
What should you do with definitions? The answer isn't simple. To figure out how to handle definitions as part of your simplification process, you first need to understand the problems they pose.
Problem #1 – Your client must be able to detect the defined words
It's not always easy.
Unlike a lawyer, your client won't necessarily pick up on the cues that indicate a defined term: a capital letter at the beginning of the word, italics, or boldface.
If your client is unable to recognize these signals and no steps have been taken to explain them to the client, the client will disregard the definitions.
Problem #2 – Your customer has to stop and think when they come across a defined word
Reading a sentence that contains a defined word requires completing 6 steps:
Stop reading the sentence.
Find the page that contains all the definitions.
Find the word being defined in the list of definitions.
Read and understand the definition (a challenge in itself).
Find the sentence he was reading.
Incorporate the meaning of the defined word into the sentence in question (another major challenge).
Customers are expected to search, read, think (often like a lawyer), and memorize as they navigate through the pages. This process can lead to what is known as cognitive overload, which occurs when the brain has to process too much information at once.
When it comes to insurance and consumer contracts, readers may stop reading, feeling confused and frustrated by the experience.
Problem #3 – Customers lose their bearings when the meaning of a common word changes
In contracts, definitions are used to limit the scope of a right or obligation. They are not intended to clarify the meaning of words for the reader.
Let's take the word " accident" as an example. Found in many insurance contracts, this word is widely used in everyday life. Its common meaning is known to everyone.
Yet it is defined in insurance contracts. Why? To narrow down its meaning, minimize the many possible interpretations, and control its scope of application. It is a matter of risk management, which is the foundation of insurance contracts.
Your client doesn't want to learn to think like a lawyer. He wants to understand his contract the first time he reads it.
However, asking a client to assign a new meaning to a word they already understand is not a simple matter. Changing the meaning of a common word is like asking your reader not just to read their contract, but to think like a lawyer. Your client may then instinctively revert to the meaning of the word that is familiar to them. Inevitably, they’ll be surprised the day you invoke a definition to deny them a right they sincerely believed they had. They’ll be all the more surprised if that definition also raises problem No. 4.
Problem No. 4 – The Russian Doll Effect
Don't turn your contract into a matryoshka doll! Avoid the Russian doll effect at all costs:
A definition that contains another definition within itself.
A definition that conceals a contractual provision.
A definition that contains words that are hard to understand.
Let’s take the example of the term “aortic surgery,” which is frequently defined in personal insurance policies:
A surgical procedure to treat a disease of the aorta that requires the removal and replacement of any affected portion of the aorta with a graft. The term “aorta” refers to the thoracic aorta and the abdominal aorta, but not
s the branches of the aorta. The surgical procedure must
be deemed medically necessary by a specialist.
This definition is complex in many ways:
It's long (did you really read the whole thing?).
It is written in a ponderous style.
It contains many medical terms that are incomprehensible to most of us.
It contains another definition ("aorta").
It contains a contractual provision.
In fact, this definition is so complex that an ambiguity has crept in. Did you notice it?
No one would be surprised by the frustration and sense of injustice that an insured person might feel if a reimbursement claim is denied based on such a complex and ambiguous clause. This approach risks damaging your corporate image and should be avoided as much as possible.
What should we do with the definitions?
There is no magic formula. Writing clearly and simply requires creativity, sound judgment, and rigor to arrive at optimal solutions that address all the issues at hand, both from a communication and a legal perspective.
Here are a few points to consider, however:
Timing. Rather than grouping your definitions into a separate section, place them alongside the main text, within the immediate reading context. This makes it much easier for the reader to refer to the definition. The reader can also immediately tell when a term is defined.
Be sparing. Use definitions only when absolutely necessary. For example, check how many times the defined words appear: if the term doesn’t come up too often, define it directly in the text, even if that means repeating the definition in several places.
Conciseness. Write short definitions. Find the most concise wording possible and remove unnecessary words.
Simplicity. Use everyday words as much as possible.
Structure. Rethink the contract's structure. This can reduce the number of definitions—sometimes to zero. It also helps simplify the definitions that are still necessary. You might be pleasantly surprised by the result.
These are ideas that challenge the traditional approaches of legal professionals, but that demonstrate a genuine commitment to transparency and fairness toward your clients. Are you ready to innovate?
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