Contract Negotiation

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Contract negotiation is a very hot potato, everybody was involved at a certain time in some sort of negotiation. Let’s break it down….what does it mean to negotiate a contract?thN2ZHCGBF

A contract is a legally binding agreement between two or more sides. Any of the involved parties can enforce the agreed terms if the other parties are failing to comply with the terms of the contract.

Contract negotiations involve discussing and compromising on contract terms to reach a final, approved draft of a contract that is acceptable to all parties.

Contract Negotiations should not depend on who’s smarter (supplier or seller), but on achieving the goal of concluding a contract that is fair, reasonable and beneficial to both parties by creating a win-win situation.

The basic steps that you have to follow when looking at a contract negotiation are :

  • Understanding Basic Contract Principles: You should know the basic legal requirements for any contract and the governing laws of the contract
  • Preparing to Negotiate a Contract
    • Determine what contract provisions are negotiable
    • Identify your objectives for entering into the contract
    • Analyze all of the terms to be included in the contract
    • Determine your “bottom line” for each disputed contract term
    • Collect documentation to support your position on each disputed contract term
    • Create a checklist of items to address during negotiations
    • Set a timeframe within which to reach an agreement on disputed terms
    • Build trust with the other party
    • Approach the negotiations with a positive attitude
  • Negotiating Your Contract
    • Draft a contract
    • Send the draft contract to the other party for review and comment
    • Review the other party’s revisions and comments
    • Prepare a counteroffer
    • Review the other party’s revisions and comments regarding your counteroffer
    • Schedule an in-person or phone negotiation
  • Finalizing Your Contract
    • Prepare a clean version of the contract for signature
    • Sign the contract
    • Make copies of the signed contract
    • Keep track of expiration and renewal dates contained in the contract

Not everybody has the needed skills to negotiate a contract. Some contracts are very easy, there is not much to negotiate, some contracts are very difficult because of their content and take a lot of time to come to the final agreement.  When doing business you should look for the best result in any negotiation, try to find the win-win result. To get to the win-win result is not always possible and not always very easy, it is the foundation of a sustainable business relationship.

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