Scope and complexity in contracts

When it comes to business contracts, two elements can greatly impact how well the agreement works: its scope and complexity.

What is the scope? Well, the scope defines wha the contract covers—what each party is expected to do, deliver or provide. Complexity, on the other hand, involves how detailed and intricate the terms, conditions, and clauses are. Both scope and complexity play a big role in shaping the contract, from drafting to execution, and can impact how smoothly your business relationship functions.

In this article, we’ll discuss what these terms mean, why they matter, and how to manage them effectively in your business contracts.

Read: Storage of legal documents: best practices

What is a scope of a contract?

The scope of a contract lays out the "what" of the agreement. It spells out what each party is responsible for—what needs to be done, delivered, or provided. Think of it as setting the boundaries for what the contract covers. A clear scope should answer important questions like:

• What is being provided or delivered?

• Who is in charge of which tasks?

• What are the deadlines or timelines?

• What quality standards need to be met?

For example, in a service contract, the scope would detail the specific services to be performed, how often they’ll happen, and what needs to be delivered at the end. If the scope is too vague or unclear, it can lead to confusion, missed expectations, or even conflicts.

Why is scope important?

A clear scope is essential because it lays the groundwork for the whole contract. When everyone knows what’s expected, there’s less chance for confusion or conflict. A well-defined scope helps to:

• Avoid misunderstandings: Both sides know exactly what’s covered and, just as importantly, what isn’t.

• Set expectations: It makes it clear what each party should deliver and expect in return.

• Cut down on risks: A clear scope lowers the chances of arguments, delays, and unexpected costs that come from unclear terms.

Read: Why you should always define deliverables in service agreements

What makes a contract complex?

Complexity in contracts refers to how detailed and layered the agreement is. Complex contracts often have numerous clauses, conditions, and requirements that cover a wide range of potential scenarios. The complexity can arise from:

• Multiple parties involved: Contracts involving more than two parties, like joint ventures or consortium agreements, often have more complex terms.

• Regulatory compliance: If a contract needs to comply with various laws and regulations across jurisdictions, it adds layers of complexity.

• Detailed contingencies: The more “what if” scenarios a contract addresses—such as what happens if there’s a delay, a breach, or unforeseen circumstances—the more complex it becomes.

Balancing scope and complexity in contracts

A good contract strikes the right balance between scope and complexity. Here’s how to manage both effectively:

Define the scope clearly

Start with a clear, straightforward scope that covers the essentials. Avoid vague terms and be specific about roles, responsibilities, and what needs to be delivered. This helps keep the contract simple and avoids needing extra clauses to clear things up later.

Simplify where you can

While you want to cover all important points, piling on too many details can make a contract hard to read and enforce. Keep the language simple and use plain English where possible. The aim is to make the contract clear, not confusing.

Cover the key scenarios without overdoing it

Focus on the most likely scenarios that could affect the contract, like delays, quality issues, or changes in scope. Address these without turning the contract into a legal labyrinth.

Be consistent with the terms

Keep things consistent. Make sure terms are clearly defined and used the same way throughout the contract. This cuts down on confusion and makes it easier to enforce the agreement.

Get legal advice for complex contracts

For more complicated agreements, it’s a good idea to consult with legal experts. They can help you cover all the bases without making the contract unnecessarily complex.

Read: The hidden dangers of auto-renewal clauses in contracts

Common pitfalls in handling scope and complexity

Even with the best planning, businesses often run into a few common issues when drafting contracts:

Scope creep

The work can start to grow beyond what was originally agreed, leading to arguments or extra costs. It’s important to have a clear process for handling any changes to the scope.

Too much legal jargon

Trying to cover every detail with complicated language can make the contract tough to read and enforce. Simplicity often works better.

Ignoring key risks

Overlooking common risks or scenarios can weaken a contract. Make sure the important “what ifs” are covered without overcomplicating things.

Read: NDAs 101: Why defining confidential information can make or break a deal

How Cobrief can help review your complex contracts

Reading your business contracts can feel overwhelming as an owner-manager of a small to medium-sized business. That’s where Cobrief comes in. Cobrief helps business owners and operators review their business-to-business contracts for legal risks.

Upload your contract to Cobrief's AI contract review software, click review and you’ll get a list of all the risks, in plain English. This helps you decide whether to sign, negotiate or reject the terms of your contract, or hire a lawyer. Think of it as a heat map for your contracts.

Get started here.

Conclusion

Grasping and managing the scope and complexity of your business contracts is key to keeping things running smoothly and building solid partnerships. A clear scope sets the right expectations, while just the right amount of complexity makes sure all risks and scenarios are covered. When you balance these well, you create contracts that are straightforward, fair, and enforceable—laying down a strong foundation for any business relationship.

Remember, a good contract isn’t about stuffing in endless details, but about making sure the important points are easy to understand and follow.