January 17, 2023
Behind every great deal, is a great contract. While negotiation begins the moment a conversation starts, contract negotiation is a complex process that ultimately seals the deal. Previously, we covered the negotiation tactics that can help sales teams soar, but today, we’re tackling contract negotiations tips and tricks, as told by the experts.
So, you’ve secured the deal and agreed the commercials, now it’s just small matter of drafting, negotiating and agreeing the contractual terms. Below are our top tips and tricks for getting contracts over the line.
Typically contract negotiations focus on the allocation of risk between the parties. Risks can be big or small and likely or unlikely. It’s important to consider which risks are your top priorities and how others rank below that. Prioritisation ensures focus on the key issues and helps you to avoid getting drawn into lengthy discussions on matters that are not a priority for your business. Prioritisation also enables compromises to be made on matters that are not of critical importance to your business. Remember that in some instances time to closure of the contract will be the priority.
Consider at the outset what you would be willing to agree if you were the one receiving the draft contract. If there is anything particularly objectionable, that isn’t one of the “priorities”, consider removing the term from the contract prior to sending it to the other party. This helps remove potential barriers to agreement and signature at the outset but also forces the other side to justify any exceptions or changes. You can also think of this as “I am only asking for what is fair” or “industry standard” approach. Being reasonable can be as simple as remaining polite and professional throughout!
As part of the prioritisation process you will need to understand the requirements of your business. Reach out to key stakeholders. Learn about the other party, particularly their interests and goals, to enable alignment of your company needs and the other party’s interests.
Ask for any changes made by the other party to be explained and listen to the explanation provided. When you understand the reasons behind a change it can help find an alternative solution or a simple change to the contract that is acceptable to both sides.
It is much easier to agree to concepts and language that everyone understands. Using plain English in contracts makes it easier to get everyone on the same page. Simplicity will increase clarity for future users of the signed contract. In need of support decoding legalese? Check out our jargon-busting legal glossary.
Linked to being reasonable and understanding, the ongoing relationship really comes into play when you intend to keep working with the other party going forward. The ongoing relationship is less important in “one off” interactions.
Find points that both parties can agree on. This helps set the tone for a negotiation process that best serves the interest of both parties. Setting a collaborative tone can achieve positive results in the short and long term.
We’re fanatical about dotting the I’s and crossing the T’s, which means we tackle contract negotiation with a methodical approach in mind. We ensure you come away with terms that best benefit your business, while building a robust relationship with the other party down the line. In need of support with contract negotiation? Discover how we can help through our flamingo subscription.