One of the essential criteria for a binding contract is agreement, or in legalspeak, "a mutual manifestation of assent to the same terms." (Barron's Law dictionary 2nd ed.) Yet I come across so many contracts in my work, where I can barely figure out the terms each party agreed to. Does it matter? Isn't it all just lawyer talk anyway?

Well if you are serious about running a successful business, of course it matters. As the saying goes, "good fences make good neighbors," and to coin a phrase, clear contracts make happy business partners.

A contract doesn't have to be, and shouldn't be, indecipherable. If you don't understand the terms of the contract you are about to sign, don't sign it until you do understand. You may be binding yourself to do something you didn't agree to, or forgo certain rights that you hadn't intended to give up.

There are a lot of reasons why contracts can be so difficult to read and understand. Sometimes, it is just that the nature of the transaction is extremely complicated and therefore the contract is complex. But for more standard business contracts, such as a work-for-hire agreement, where the subject matter is not overly complicated, your contracts should spell out each parties' rights and responsibilities in plain language.

Some contract drafters are just better writers than others, but some drafters purposely hide behind needlessly "lawyerly" terms because they aren't exactly sure what they are trying to say. That kind of vagueness can lead to disputes and even litigation that the parties might have avoided had they put a little more effort into clarifying the terms before signing.

If your contracts are clear and straightforward already, great. If not, ask questions until you are satisfied that you understand what you are signing, and make sure the contract reflects that understanding. A good lawyer will not necessarily have the answers to every conceivable legal situation you might find yourself in, and she can't tell you exactly what the outcome of any dispute will be, but she should be able to give you an honest assessment of your chances based on your situation and the terms of your agreement.

Your chances for success can be improved by eliminating vague, ambiguous and confusing language from your contracts.

(For a slightly different angle on this concept, see my Risk Tip from the December 14 IRMI.com newsletter, "Don't Let And/Or Creep Into Your Contracts.")