Why Are Contracts So Hard to Read? How Contract Complexity Slows Deals

Why Are Contracts So Hard to Read? Understanding the Complexity Behind Legal Agreements

Have you ever found yourself staring at a contract, wondering why it's so difficult to understand? If so, you're not alone. The complexity of modern contracts is a common frustration for many business professionals. From convoluted legal jargon to excessive clauses and unpredictable templates, contracts have become harder to read and even harder to negotiate. But why are contracts so hard to read in the first place?

In this post, we will break down the main reasons behind contract complexity and how it hampers deal-making. We’ll also explore practical strategies to simplify contracts, reduce reading friction, and speed up the negotiation process, without compromising legal protections or revenue goals.

Whether you’re in sales, legal, procurement, or finance, understanding why contracts are so hard to read and how to address this challenge is essential for accelerating your business growth.

Quick Answer

Contracts are difficult to read because they accumulate legal jargon, layered risk protections, cross-references, exceptions, and years of revisions. As complexity increases, negotiations take longer, legal costs rise, and deals slow down.

Why Contracts Become So Complex

Most teams know their contracts have become too complicated.  Contract complexity often creates negotiation friction, longer review cycles, and increased operating costs. A 2021 Legal Evolution study found that companies with lean, well-structured agreements close transactions 46% faster and slash formation costs by up to 50% compared to their peers. When every extra day chips away at revenue, complexity is more than a legal headache: it’s a growth inhibitor.

This post unpacks why contracts become over-engineered and lays out a practical, data-first playbook to simplify them, without sacrificing risk controls or revenue protection.

1. How Contract Complexity Delays Deals 

Why it matters for go-to-market teams

• Sales teams watching deals stall lose momentum and forecasting accuracy.
• RevOps sees pipeline velocity drop and CAC climb.
• CFOs/Finan struggle to predict revenue recognition and cash flow.
• Marketing can’t leverage happy customers if the logo is still “in signature."

Contract Signal Example

A limitation-of-liability clause that contains six carve-outs, multiple exceptions, and nested cross-references may signal future negotiation friction even before legal review begins.

2. Why Contracts Are So Difficult to Read: The Over-Engineering Problem

• Template sprawl. New regions, products, and compliance regimes spawn one-off templates. Tyler, a finance leader at Elastic, recently admitted their library ballooned to 30+ versions—each with inconsistent risk positions.
  
  
• Legacy risk stacking. Teams add clauses after every major incident but rarely removed once the threat subsides.
  
  
• Legalese culture. Lawyers default to precedent language that’s unintelligible to business stakeholders.
  
  
• Fear of missing edge cases. Teams try to codify every possible scenario, bloating scope grids and liability carve-outs.
  
  

The result? Agreements that are hard to read, hard to negotiate, and even harder to operate against.

Many forms of contract complexity appear as contract signals that indicate negotiation friction, risk concentration, or market misalignment.

Key Takeaway

The problem is not that contracts are legal. The problem is that most organizations cannot distinguish necessary legal protections from unnecessary complexity.

3. Contract Complexity vs Contract Risk 

The language used in contracts significantly contributes to their complexity. Dense legalese and inconsistent terminology obscure the true meaning of clauses, making it harder for stakeholders to focus on business objectives.

Standardizing key terms and simplifying language can dramatically reduce reading friction and make contracts more transparent across teams.

Contract intelligence helps organizations identify which clauses create business value and which simply add complexity.

Contract Complexity as a Contract Signal

Complexity itself can be a contract signal. Agreements with excessive cross-references, nested exceptions, and unusual drafting structures often require more negotiation effort and longer review cycles. Contract intelligence helps organizations identify those signals before deals slow down.

4. How Contract Benchmarking Simplifies Contracts

1. Start with the outcomes. Identify the top three business objectives (e.g., uptime, data ownership, payment terms).
   
   
2. Look for deviations. Use analytics to compare each clause against market benchmarks instead of clause-level comparisons.
   
   
3. Flag ambiguity. Anything that a non-lawyer can’t paraphrase in one sentence is a risk hotspot.
   
   
4. Quantify risk. Assign a favorability score to each section to prioritize negotiations.
   
   
5. Capture insights. Feed structured data back into your CRM and contract intelligence dashboard to inform future deals.
   
   

Contract intelligence platforms can extract hundreds of structured contract attributes and compare them against broader market benchmarks.

Benchmarking helps distinguish between market-standard protections and provisions that may unnecessarily slow negotiations.

Benchmarking reveals whether complexity is actually necessary or simply the result of accumulated drafting over time.

5. Simplify with Data, Benchmarks, and Certification

1. Convert contract language into structured information that can be analyzed and benchmarked. Convert your contracts into structured datasets so you can analyze rather than review.
   
   
2. Benchmark against the market. See exactly where your terms diverge from industry norms, especially those that slow deals, like indemnities and liability caps.
   
   
3. Identify which clauses create risk, negotiation friction, and unnecessary complexity. TermScout’s contract intelligence solutions surface the exact clauses driving risk and delay, so you can fix them before negotiations start.
   
   
4. Many organizations use contract certification to demonstrate that their agreements align with market standards. A TrustMark™ Trust Seal signals to buyers that your agreement meets verified market standards, eliminating weeks of back-and-forth.

You might also want to read Why AI Contract Certification Isn’t a Diploma: It’s a Deal-Maker

Procurement teams increasingly evaluate contract complexity as a decision-making factor because complexity often predicts negotiation effort.

Understanding why contracts are hard to read is useful, but the bigger issue is knowing which terms are actually slowing deals down. When contract language drifts away from market norms, review gets heavier, negotiations take longer, and hidden risk becomes harder to spot. Many teams use benchmarking and contract intelligence to compare agreements against real-world standards, identify friction earlier, and move deals forward with more confidence.

Complex contracts are not always risky. Simple contracts are not always fair. Benchmarking helps organizations understand the difference. 

See how your contract compares to market standards and identify the provisions most likely to slow negotiations.

Frequently Asked Questions

What is the problem with contracts?

Most B2B contracts are drafted in dense legal language, lack standardized structures, and diverge widely from market norms, making them hard to understand and costly to negotiate.

• Sales pain point: Reps can’t quickly answer prospect questions or update deal forecasts because key terms are buried in impenetrable prose.
  
  
• Legal pain point: Counsel spend excessive hours deciphering bespoke clauses instead of focusing on high-value risk analysis.
  
  
• Procurement pain point: Inconsistent templates across regions lead to compliance gaps and audit exposures.
  
  
• Tip: Adopt a modular, data-driven template library. Standard clauses that align with your risk appetite reduce drafting time by up to 60% and give all teams a common language.
  
  

What is the complexity of a contract?

Complexity refers to the depth of nested clauses, cross-references, and ambiguous terms, not just the number of pages.

• Nested definitions: When one clause points to ten others to explain a single concept, reviewers waste time jumping back and forth.
  
  
• Hidden cross-references: “See Section 10.2 for liability limits” makes it impossible to get the full picture in one pass.
  
  
• Ambiguous wording: Vague phrases like “reasonable efforts” or “material breach” spark endless negotiations over interpretation.
  
  
• Tip: Use contract intelligence tools to automatically map cross-references and highlight nested structures. A visual clause map can cut review cycles by half.
  
  

What are the challenges of contracts?

Slow cycle times, high legal costs, value leakage post-signature, and fractured stakeholder alignment.

• Slow cycle times: Every extra negotiation round adds days. Studies show each back-and-forth can cost you 2–3 days per deal.
  
  
• High legal costs: Custom drafting and redlining inflate outside counsel bills; you end up paying for repetitive work.
  
  
• Value leakage: Billing errors, missed renewal windows, and improperly scoped services can erode up to 9% of contract value each year.
  
  
• Fractured alignment: Sales, Legal, Procurement, and Finance often work in silos; each party sees a different version of “acceptable risk.”

Olga Mack

CEO

Olga is a distinguished legal innovator, executive, and thought leader specializing in the intersection of law, technology, and digital transformation. Currently serving as the CEO of TermScout.