Learn English – use a contraction with names or only with subject pronouns

There are patterns, but not rules.

Contractions are extremely common and accepted in most speech, both social and business. However, in very formal speech (presentations to organizations, public speeches), they are often avoided.

Contractions are much less common in written English. In formal writing, scientific, business, educational, and most journalistic settings, full form is used. But in personal communications, and even some business communications to a small or close group, they may be wholly acceptable.

As others have said, some contractions are more acceptable than others. Isn't is commonly used where won't or can't wouldn't be acceptable (Oh, I just used a contraction in written form). Forms like would've are much less common in writing.

In written form, it is almost never wrong to use the full form. At most it will sound a bit stiff. If you or your students are unsure, write it out.

(All of the above is from a US perspective.)

Short answer: yes. It'll be understood, and if it's seen as a mistake, it'd be one of register rather than of grammar.

Longer answer: contractions are informal by nature, so if you're asking about formal written English, then any contraction is frowned upon, whether it's "it's", "you're", or "John'll".

So we're clearly talking about less-than-formal English, where the rules (such as they are) get fuzzy.

• In spoken English, contractions are totally fair game. In fact, you really have to pay attention to even notice whether someone said "I am" or "I'm". The difference between "John will" and "John'll" is a bit more audible, but it's still perfectly fine to say the latter rather than the former.

• In written English, the contractions you choose to use, or not use, determine the level of informality. In this sense, "John'll" is a bit more informal than "you're", but there are very few contexts where the latter would be acceptable while the former wouldn't be.

Bottom line is, in an informal context such as a video game, usage such as "John'll" simply adds to the colloquial, informal nature of the dialogue/narration. It is not, in and of itself, a mistake.