What is Contract Negotiation?
When a party needs to negotiate business contracts, they are typically involved in routine transactions that have custom terms or one large business transaction with multiple business contracts.
Contract negotiation occurs when two parties come together to decide on the terms of an agreement. This can occur before business contracts are drawn up, but the process can also be triggered by parties to contract agreements wishing to make changes.
Contract parties use many negotiation tactics to get what they want out of a business deal. In this article, you will learn about these tactics and which types of business contract negotiations they can be used on.
Tips to Negotiate Business Contracts
Negotiating business contracts can seem daunting, especially because the terms of the agreement tend to affect your pocketbook. However, with the right know-how, anyone can successfully negotiate one.
Here are ten tips that you can use to get what you want out of a business contract:
Tip #1: Use Your Personality to Your Advantage
Most of what goes on during contract negotiations has to do with how you approach them. Think about who you are when it comes to getting what you want in your daily life. Do you like to find a way to make everyone happy, or do you prefer to demand what you want above all else?
These questions also apply when you need to negotiate business contracts because it defines the two most common approaches: adversarial and collaborative.
If you are an adversarial negotiator, you are ready to get what you want, no matter the cost. Rather than trying to work together to come up with a solution that works for everyone, you would rather make your demands and insist that you will dominate over other parties.
While this approach can be successful in some scenarios, overall, it is not always the best option. When you allow your emotions to get in the way of business dealings, it can lead to clouded judgement. It also tends to create a competitive atmosphere, which can make it even more difficult to get what you want out of a business deal.
On the other hand, if you are a collaborative negotiator, your goal is to come up with a solution that is mutually beneficial. Rather than argue on points that are most important to you, you take time to listen and understand what the other party need. Collaborative negotiators often find better success during contract negotiations.
Tip #2: Don’t Do Too Much at Once
One of the biggest mistakes you can make when it comes to contract negotiation is trying to accomplish too many things at once. Instead, break up negotiations into phases. This makes it easier for everyone to process, which should lead to higher success rates for you.
Tip #3: Choose Your Battles Wisely
No contract is perfect, and you won’t get everything you ask for no matter how hard you try. The best advice you can use in during contract negotiations is to choose your battles wisely. What are the most important things you want to get out of the agreement? Pull those to the forefront of the conversation and don’t hesitate to make concessions on the smaller things.
When all is said and done, focusing your efforts on the big wins instead of wasting energy on the small things is likely to put you in a more favorable place.
Tip #4: Leave Room to Negotiate
When things start to go your way, it can be tempting to button up the deal as quickly as possible. This might lead you to saying “yes” to things too quickly, which is likely to hurt you in the long run. Don’t forget to leave room to negotiate, even if that means saying “no” to things that aren’t that important to you.
Remember : you can always circle back and change your mind later if you say “no”, but if you make concessions too quickly, you could find yourself stuck in a contract you’re not happy with.
Tip #5: Ask Questions
Contract negotiations are all about communication. Don’t be afraid to ask questions to find out where the middle ground is between you and the other parties of the contract. What can you do to make this agreement as mutually beneficial as possible?
Tip #6: Do Your Research
Coming prepared to a negotiation session is vital to the overall success of the meeting. Find out everything you can about the other party and remember: the more you know, the better. It’s also essential that you keep your personal details as private as possible, since the less the other party knows about you is a benefit to you.
Tip #7: Act on Facts
If there’s one thing that should be avoided at all costs during contract negotiations, it’s intense emotions. If you feel yourself starting to feel emotional about the situation, take a moment to calm down and remind yourself that you are working on a business dealing. It’s vital that you act on facts, not emotion, so staying level-headed is essential to your overall success.
Tip #8: Skepticism is Key
Going into each negotiation meeting at least a little skeptical of the other party is never a bad idea. After all, you can never truly know what their intentions are. Hesitate to put your full trust in the other party and tread lightly.
Tip #9: Ask for What’s Fair
If you find yourself stuck and not able to come to an agreement, try communicating to the other party that you are only asking for what’s fair. Make sure that you are familiar with similar business dealings, and don’t be afraid to cite your knowledge during negotiations. Sharing insightful facts could be a great asset.
Check out this article to learn more negotiation tactics that can help you become a better negotiator.
Common Types of Business Contract Negotiations
Understanding the common types of business contact negotiations can help you come more prepared for when you must do the negotiating. If you’ve ever haggled on a price for a car or sent multiple offers in to purchase a new house, you have already started negotiating contracts.
Business contracts aren’t the same as these examples, but they are similar in many ways. For example, while a car sales contract might involve negotiating the price of a vehicle, a business contract might involve coming to an agreement about how much money you will pay a vendor for their supplies.
Negotiating business contracts cover a variety of different types of situations. Here are a few business contracts that commonly require contract negotiations:
- Acquisition agreements
- Partnership agreements
- Franchise agreements
- Settlement agreements
- Stock purchase agreements
- Licensing agreements
- Employment separation agreements
Check out this article to learn more about the different types of business contracts that often require contract negotiations.
Who Negotiates Business Contracts?
If you need to negotiate a business contract, it is not usually a good idea to do it alone. Since there are so many moving parts to a business agreement, you should hire business contracts lawyers to assist you. Post a project on ContractsCounsel today to get connected with business lawyers who are well-versed in vendor contracts and contract review and know how to get you what you want out of any contract you sign.