A New Legal-Ease

Applicants for a personal loan from New York's First National City Bank have something of a shock in store: the new standard loan contract is written in language they can easily understand. The simple one-page document--one-third as long as its predecessor--spells out the bank's and borrower's obligations in relaxed you and I terms with nary a hereinafter to get in the way. And Citibank is not alone (see box). Anxious to stimulate business, banks and insurance companies alike are hastening to switch from the old long-winded fine print to the new legal-ease.

Next month First National Bank of Boston is putting the vernacular into its consumer credit transactions, from student loans to Master Charge agreements. Later this month, Nationwide Mutual Insurance Co. will offer a plain-talk automobile policy throughout the U.S. similar to one introduced recently by Sentry Life Insurance.

Both Nationwide and Sentry first offered the policies in Pennsylvania, where early this year a regulation went into effect, requiring that auto-insurance policies must rate at least 40 on the Flesch Readability Scale. That scale, which ranges from 0 to 100 for the maximum possible brevity and simplicity, was devised in 1943 by Language Expert Rudolf Flesch (The Art of Readable Writing). But not until "we entered the age of consumerism," says Flesch, did business realize that "to have documents written by lawyers isn't good enough. because the consumer isn't satisfied."

Now Texas is considering a plain-language requirement for health and accident policies. The new federal Pension Reform Act insists that company booklets be written "in a manner calculated to be understood by the average participant." And the new federal Warranty Law states that product warranties have to be "simple and readily understood." Linguist Flesch cautions that most of the rewrites do not yet rate a 60 on his scale--the level, he says, of the New York Daily News or SPORTS ILLUSTRATED. But be it hereinafter understood that whereas the aforementioned and previously established methodology of contract composition has been adjudged dull and devoid of intelligibility, companies that fail to adjust do so at their own risk.

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