Contract Negotiation and Formation
As a business owner you will often seek advice regarding contracts from an attorney. It is also beneficial, however, for you to have a basic understanding of how high-quality contracts are negotiated and formed. An attorney who is skilled in creating business contracts can assist you with your contract formation and negotiation questions.
Whether you are negotiating an employment contract with a job candidate or the lease agreement for new office space, it may be helpful to keep a few negotiation tips in mind.
Determine your negotiation style. Are you competitive or cooperative? What is your threshold for compromise? There is no right way to negotiate; it is more important that you feel comfortable and develop a style that works for you.
Determine your negotiation boundaries. Although it is important to enter negotiation with an open mind, it is equally important to do the math before you enter into the process. Knowing exactly where you can and cannot afford to compromise will give you parameters and guidance throughout the negotiation process.
Know the other side. Do your research on the person with whom you will be negotiating. Knowing the other side will not only help you determine what it is he or she is hoping to gain from the negotiation, but it will help you determine your negotiation strategy.
Be prepared. Your goal is to know the subject of which you are negotiating better than the other side. Bring any and all supporting documentation with you; compile cost analyses; develop a portfolio; do what it takes to have knowledge and facts on your side.
Prepare contracts. When you go to a negotiation bring documents that allow you and the other party to fill in the blanks according to the agreed-upon terms. Be sure to include signature lines for all parties. This will help to solidify the process once agreement is made.
Be considerate. There is an old saying that holds true in negotiations, “you get more bees with honey than with vinegar.” This does not mean you need to be congenial at all times; however, being respectful and open-minded can be the key to successful negotiation.
Drafting the Contract
Business owners will often rely upon their lawyers to draft contracts for them. However, having a basic understanding of how contracts are drafted can be helpful when reading contracts other than your own or determining if your current contracts are in need of revision.
- Contracts should be as clear and concise as possible.
- Always use legible font and do your best to break up long paragraphs to ensure optimum readability.
- Determine all the different scenarios a contract may face and include language that adequately addresses such possibilities.
- Be careful when using standard or boilerplate language. You want your contracts to be specific to your needs and your business.
- Always define important terms.
- Be sure to anticipate litigation by including sections regarding where conflicts will be heard or what law will apply. You may choose to include a specific venue or you may opt for a mandatory arbitration clause. Either way, it is important to spell these matters out in the contract.
- Include signature lines for all parties as well as a line for the printing of the name and date.
- Number all pages to avoid the appearance that pages were added after the agreement was signed.
- As with all documents reflecting your business standards, proofread carefully.
Speak to a Contract Law Attorney
Many agreements are made on any given business day. Therefore, a businessperson gains important advantages by utilizing effective techniques when negotiating, constructing and interpreting contracts. If you have questions about contracts, an attorney who is skilled in creating and litigating business contracts can address your concerns.
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