ContractsProf Blog has this post by Brian N. Larson about a study by Stefania Passera and others that apparently shows that diagrams made a contract easier to understand.
The study’s findings don’t come as a surprise. Plenty of contracts describe mechanisms with alternative outcomes, with those outcomes then prompting further outcomes. Tag-along and drag-along rights come to mind. Also preferred-stock antidilution provisions. Describing such mechanisms using just prose can be challenging. Including a flow chart might help.
But the introduction to the article about the study (here) focuses on the drawbacks of traditional legalese in contracts. In particular, it mentions the famous Canadian “case of the million-dollar comma,” a dispute between Rogers Communications and BellAliant in which I acted as expert witness. The fix for legalese generally isn’t flow charts: it’s eliminating the legalese! And the dispute between Rogers and BellAliant was caused by a mistake in translating the French-language version of the contract into English. Flow charts would have had no role in fixing that. So perhaps the authors of the article could have done a better job of putting diagrams in context.
I didn’t have access to the article describing the study, but Brian’s account includes figure 8 from the article, which shows an extract from a contract and how that extract could be expressed using a flow chart. The prose used in the extract isn’t the worst I’ve seen, but it could be significantly improved. The mechanism described is hardly of mind-bending complexity; I suggest that clearing up the language would make it sufficiently accessible that you could do without the flow chart.
So the unintended message I get from the article is that before you fire up your favorite flow-chart software, tend the the prose of your contracts.
Another issue—one that Brian points out—is that if you use both prose and a flow chart to express a contract mechanism, you’re saying the same thing twice. What if they’re inconsistent? I’m not sure I’d be willing to use just a flow chart.
Why wouldn’t the flow chart be treated the way an illustrative example would? If an example reached a result that the text arguably wouldn’t, my guess is that a court would privilege the example as a more precise indication of the parties’ intent; a flow chart likewise. Still, as always, be careful to keep them consistent. Or should our motto be “a quick fix is the shortest route to a protracted shambles”?
A flow chart wouldn’t be an example, it would be an alternative way of saying the same thing. If they’re inconsistent, who knows which the parties paid more attention to.
In my opinion, there is no one-size-fits-all answer. It depends on how and why you are drafting the contract. For example, if you are involving non-lawyer colleagues in the drafting process (as I often did, as an in-house lawyer), then you may have to adapt to *their* way of doing things, and this way of doing things may involve using flowcharts rather than prose. Also, if you are drafting the contract not only because there has to be a contract, but also as a way of formalizing operational procedures, then it may be wise to keep the target audience in mind. If it is a target audience of people who are used to using flowcharts, then you may wish to use flowcharts rather than prose.
Interesting that the example refers to a process that may have more than one iteration. This reminds me of the discussion about blockchain “contracts” (transactions might be a better term). A practical example – many cited in the blockchain discussion are in the financial sector – banks need to agree a process for transferring money from one account to another in different jurisdictions and with different currencies. It may be easier to describe (and understand) a complex process in a flowchart than in words.
If a drafter opts to use words and flow charts to say the same thing twice, she should privilege one or the other in case of accidental inconsistency, as in (MSCD-rejected) words and numbers: ‘twelve (13) widgets’. The same logic applies to examples and any twice-described ideas as in the ‘Australian passport problem’.
On whether to use words alone, flowcharts alone, or both, my thought is both, with the flowcharts devalued to zero, like section headings. I wouldn’t draft using flowcharts alone, because if a dispute arose over their meaning, it would be settled by words (testimony), so why not use words in the first place to avoid the dispute?
Why not words alone? Because in most cases, the flowcharts will match the words, so why always deprive readers of the benefits of flowcharts when occasionally the charts don’t match the words? Just put the risk of non-match on whoever relies on the flowcharts.
Similar issue with language: ‘This agreement has English and Arabic counterparts. Where the two disagree, the Arabic prevails’. Whoever opts to rely on the English version takes her chances.
So the rules of thumb are (1) don’t say things twice without good reason; (2) when you attempt to say the same thing twice, take care to succeed; (3) against the chance you slip up, privilege one version.