Emergence of Visual Contracts: A Picture is Worth a Thousand Words

The common idiom says that a picture is worth a thousand words.  It is also well known that many commercial contracts contain thousands upon thousands of words.

Businesses across Australia are starting to bring these concepts together through the introduction of ‘visual contracts’ in place of standard ‘word based’ agreements.  Unsurprisingly, a visual contract will not be comprised solely of visual elements – it will still require some words, and perhaps many words, to complement the visual components in order to properly express the agreement of the parties.

The rationale behind the emergence is to simplify complex agreements so that non-lawyers can more easily understand what they are agreeing.  Further, in some cases, visual depictions can provide clarity and context in a way that the written word (or even the proverbial ‘thousand words’) simply cannot.  For example, with complex concepts in the engineering development space or software programming.

The goal is to create a binding legal document that incorporates design elements to improve the overall user experience, with simplified understanding to better assist people with their contract management and legal decision making.  The easier an agreement is to understand, for everyone and not just lawyers, the more accessible the contracting process can be for those who lack legal training.  This reflects the broader move away from the concept of legal instruments being ‘written by lawyers for lawyers’.

Dense, complex written agreements can be daunting for those involved, and there is often a level of scepticism due to lack of comprehension or suspicion that hidden risks are nestled within the legalese.  Visual contracts may be a way for the parties involved to improve trust levels in the relationship because improved comprehension, by its nature, makes communication seem more transparent and natural.  Not to mention that large commercial contracts often fall to non-lawyers for administration and ongoing management.  Visual contracts offer an opportunity to simplify the process of continuing commercial contracts administration.

While some may be wary of the enforceability of a visual contract, there is little reason to believe that they would be treated differently to a written contract.  At a conference in December 2017, Robert French AC, former Chief Justice of the High Court of Australia, said “[t]here is no reason in principle why pictorial contracts explained orally or supplemented textually or contextually could not be enforceable in the same way as any other contract.”

While there are various benefits of visual contracts, in practice, visual contracting is not without its potential risks.  The foundations of our Australian law and legal system are built on the common law which has developed over hundreds of years.  While contract law does not require a written agreement, the common law has typically categorised contracts as being in writing, oral or partly in writing and partly oral.  While whether ‘visual elements’ such as pictures, diagrams and other visual components can be considered to be ‘in writing’ may be a matter of semantics, typically ‘in writing’ is equated with ‘in words’.  A departure from the word-rich form to a visual form represents a transition to a new era in which there could be a lack of certainty about the respective rights and responsibilities of the parties.  The current absence of case law in the area may raise legitimate concerns for parties (and their lawyers) who are contemplating drafting and using visual contracts.

There are also concerns with several other key issues.  It is not as simple to vary a visual concept as it is to amend a written clause.  What may traditionally have been a quick amendment by the lawyer or possibly contract administrator, may require a call to a graphic designer.  This may slow down the negotiation process.  Beyond that, there may be issues when it comes to certain and consistent interpretation of a visual image.  For example, one person may interpret an image in a visual contract differently to another person.  In a similar vein, it may be more challenging to have consistency throughout a visual contract or across a range of documents without the common use of defined terms and it is likely to be more difficult to draw precedent value from court decisions.

Despite the obvious hurdles, visual contracts are continuing to increase in use and popularity.  We have recently worked with a client to develop a visual contract for use in their engineering and manufacturing business and by all reports the document has been well received and appreciated both internally within the client’s business and externally.

Not every contract can be readily transformed into a visual contract, but if you’d like to explore whether visual contracts may be suitable for your business, we’d love to hear from you.