Getting Started

Understanding Contracts

Contracts are hard to read...but there is a way to get what you need out of a contract with a lot less effort.

Five Things to Focus on when Reading a Contract

Here at SimpleTerms, as we’ve tried to make sense of thousands of contracts, we’ve naturally developed a few habits that have become the basis of our product.

So, what’s our system? Well, it’s nothing too complex but it is built on three core principles:

  • Contracts can contain dozens of clauses. Usually, different ideas and concepts are jumbled together and when you combine that with the fact that the language itself can be pretty complex, it causes the mind to wander.
  • There are usually 3 types of information in a contract: the stuff you need to know now, the stuff you may need later and the stuff that probably won’t ever matter to you. Figuring out what’s important now helps to prioritize things in your head.
  • SimpleTerms exists because contracts between businesses and consumers have become so unbalanced. Powerful corporate lawyers craft bullet proof language to protect their clients. Consumers are left without a say. We spent months researching consumer complaints and common unfair practices that have emerged across industries to help identify the risks most people will be faced with.

The challenge, then, was to figure out how to break down a contract to help focus, prioritize and identify the riskiest parts. Five key themes emerged that serve as the basis for everything we do.

The SimpleTerms App categorizes, highlights and summarizes contract clauses into these 5 areas. We’ve found that when going through a contract, focusing on one area at a time puts you in the right mindset to process the information quickly. In many cases, you may only need to go through 1 or 2 areas rather than all 5. The point is, this system helps you pick and choose what you need out of a contract, when you need it.

Those Five Contractual Gray Areas, as we call them, are:

Price and Payment

You need to know how much it costs and when you’re expected to pay. Sounds obvious! But, with taxes, hidden/extra charges, add-ons, and late fees, it may not always be that obvious what the final bill is going to look like.

Cancellation and Duration

Contracts will almost always have a start and an end date. But things come up in between so what happens if you need to cancel or make a change? Is your credit card automatically charged for another 12-months when you’re nearing the end date? Is there a (free) trial period and if so, how do you get out of the deal before you have to pay?

Rules and Restrictions (Do’s and Don’ts)

There will usually be a set of terms that tell you how you can use the product or service along with any limitations. In addition to the obvious stuff about not breaking the law, these clauses have a real impact on what you’re getting. Think about that lease or HOA policy….can you keep your grill on the patio or park on the street? Break these rules and you may be in breach of contract --- which could lead to penalties and fines, or worse, the service could be suspended or cancelled outright.

What happens when things go Wrong? (Problems)

If the product breaks, the service doesn’t work like it should or you want to make a return, the contract says what the company is and, perhaps more importantly, is not responsible for. What’s covered in a warranty and how do you get a replacement? These clauses can be very long and overly complex but that’s on purpose --- they are meant to protect the company’s interests in cases where you are trying to get some money back or are seeking legal action against them.

The Fine Print

Ah, the fine print….the little ‘gotchas’ the company may be trying to sneak in there. For example, you might come across clauses that let the company use your personal information to make money from advertising. If you read closely enough, there may be options for you to opt-out or stop them from doing it. Since we put so many and such a wide variety of contracts into SimpleTerms, we are able to find cases where a company might be doing things that just aren’t standard practice and will flag those up in this section.

SimpleTerms helps you easily identify each of the key areas in a contract so you can read what you need, when you need it. Alongside all of the relevant clauses being highlighted for you (in yellow, green, purple, blue and pink…in that order!), we’ve built quick-to-read summaries for each area in plain language, without the legalese.

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