What is a Business Contract Negotiation?
A business contract is an important legal document that specifies essential duties between parties and creates a foundation for their working relationship. A business contract ensures compliance and a high standard of quality. It needs to be well drafted, clear for both parties to understand, and legally enforceable.
As with any type of contract, a business contract can be negotiated. Read the rest of this article to learn about key terms included in business contracts, how to navigate the contract negotiation process, and when you should consult with a lawyer for legal guidance.
What’s Included in a Business Contract?
Although there are various types of business contracts, they usually include some of the following terms.
- Indemnification. This clause specifies what compensation one party will provide to the other if losses or damages are suffered.
- Force majeure. If something outside of the parties’ control occurs, such as a pandemic, this prevents them from having to shoulder responsibility for it.
- Severability. This clause ensures that the whole contract will still be deemed valid if one part isn’t, maintaining the integrity of the agreement.
- Confidentiality. Business contracts usually contain clauses to protect sensitive business information, such as trade secrets.
- Non-compete. This serves to prevent employees from starting a similar business that competes with the current employer.
- Dispute resolution. Contracts should specify what method should be used if disagreements arise. This can include mediation or arbitration.
- Termination. The contract needs to outline how either party can terminate it, and what their duties are, such as providing ample notice beforehand.
- Payment. All payment amounts, deadlines, and methods need to be clearly specified.
How Should You Negotiate a Business Contract?
If you want to negotiate the terms in your business contract, you should consider some important tips.
Review Your Business Contract
Start by reviewing your contract to identify any vague or confusing language. It’s essential to know what everything means so that you know what you want to negotiate, and there are no hidden surprises that arise during the discussion.
It’s a good idea to get a legal review of your business contract from a qualified lawyer. ContractsCounsel, an online legal marketplace, has vetted lawyers on the platform who can conduct a legal review for you. They’ll be able to spot issues and red flags you might miss.
To request a review, post your project on the ContractsCounsel marketplace (it’s free). You’ll receive multiple bids from lawyers on the platform. Choose the best lawyer for your requirements, based on criteria such as their client ratings for previous projects completed on the platform, credentials, and years of experience.
Consider the Payment Terms
Payment is one of the most commonly disputed elements of a business contract. You want the terms to be fair and clear so that there is no room for misunderstandings. If you’re negotiating payment for a service or a salary, do your research to learn of some standard figures in the industry. You can mention these if you’re hoping to increase, or lower, the amounts during the negotiation.
Focus on Leverage
Look for things that can put you in a powerful position during the negotiation and get you what you want. Instead of simply discussing how you want a lower price on the contract, leverage entails mentioning why this will be beneficial or important. For example, you could mention that you are the biggest vendor or supplier and essential to the business operations.
Ask About Timeframes
Deadlines can be another source of conflict. It’s essential to discuss all timeframes regarding services and performance so that you are ensured that your goals are aligned with them and you’re not chasing unrealistic or unfair expectations.
Have Clarity About Your Preferences
You should enter the negotiations with clarity about what you hope to achieve. What’s most important to you in the contract? What do you want to change, and why does it matter? What terms are unreasonable or unfair? By analyzing your motivation, you’ll have the confidence to discuss important contract terms.
Research the Other Party
Knowing yourself and your goals is one thing, but you should also ensure you have a strong idea of what the other person wants. Try to see the situation and negotiation from their perspective, as it will enable you to think creatively to find a middle ground on the matter. The best way to do this is to listen more than you talk, as it will help you identify their interests, goals, and motivations.
Get Everything in Writing
When you and the other party agree on the new terms of the contract, you should get it all down in writing. This will prevent misunderstandings and future disputes, while protecting your interests. In the document, include facts such as exactly what was discussed, what you agreed on, and the date and time when you talked.
Consult a Legal Professional
If you’re unsure of how to negotiate a business contract, or the other party makes you feel like there’s no room for discussions, you should consider hiring a lawyer for assistance. A lawyer will be able to provide a fresh, professional take on the situation.
Here are some ways in which a lawyer can help you with business contract negotiations:
- They’ll identify any unclear or one-sided language in the contract that should be changed to protect your interests.
- They’ll anticipate worst-case scenarios if you sign the contract.
- They’ll ensure all demands are legally sound.
- They’ll formulate negotiation strategies that are legally persuasive.
- They’ll prevent you from making mistakes, such as accepting the first offer, and build strategic counteroffers.
- They’ll give you peace of mind that a professional, qualified lawyer is fighting for your rights and requirements.
Do You Need to Hire a Lawyer for a Business Contract Negotiation?
If you’d like to work with a lawyer to negotiate a business contract, hire one on ContractsCounsel. As one of the largest online legal marketplaces, ContractsCounsel offers more than 1,000 vetted lawyers on its platform who are ready to assist you with your negotiations. You can search for the best lawyer for your requirements according to factors such as their location, client ratings, experience, and field of expertise.
