Here are some guidelines that can help you improve your chances of getting what you want from the deal:
Start with a draft
Successful commercial contract negotiation is a give-and-take process, but ultimately you want to come out on top.
There are many resources available to help you draft a commercial contract. You can hire a lawyer, but if you’re starting, you may want to consider using one of the many online resources that can help you create a contract template. You’ll want to start with either a draft your company already uses or one your lawyer can provide. If you’re working for a large company that frequently deals with vendor contracts, you likely already have a standard contract template. If not, ask a lawyer to help you write one. In the long term, this will save you time and money.
Keep your initial terms simple
Don’t include unnecessary clauses in an agreement. They will only distract from your main terms and make the parties less likely to sign the commercial contract. Studies show that too much legal terminology can hinder negotiations. Keep it short and sweet, and you’ll have better results.
Use words wisely while negotiating
Certain words have specific meanings in law, so be careful which ones you use. For example, the phrase “best-effort” typically means “doing everything possible under normal circumstances” rather than “going all out at any cost to get a deal done.” Using the wrong word in your contract could leave you open for litigation down the road, so choose your words carefully when performing contract negotiations.
Prioritise the key objectives
Not all commercial contract terms are created equal: some are more important to your business or project than others. It would be best to have a clear sense of which terms are most important to you and why. If a word is less important, consider whether it’s even worth negotiating. When you go into a negotiation, you need to have a good idea of your priorities and what you are willing to give up to achieve them. For example, in some cases, it might be essential for you to get a particular clause or provision in the contract, but you might not care as much about another clause or provision. This is an excellent time to think about the different types of clauses or conditions that would be helpful for your business. For example, suppose you are negotiating a lease contract with a landlord. In that case, the lease might be necessary to allow for early termination if there is a change in business circumstances. On the other hand, if you are negotiating an employment contract with an employee, it might be important that there is no non-compete clause. Identifying and prioritizing your objectives will help you avoid getting caught up in the details of the contract and will allow you to focus on what matters during negotiations.
Offer a win-win scenario
It’s crucial that both parties feel they have received a fair deal when entering into a contract with another person or business. The best way to achieve this is by creating a win-win situation. The negotiation process will be smoother if both parties work towards an agreement that benefits everyone involved.
Ask questions and understand your counterparty’s motives
As you start negotiations, don’t be afraid to ask questions about why your counterparty wants certain things from the deal and how their needs match up with your own. A bit of research can go a long way toward helping you craft an offer that meets your goals while also being attractive enough for the other party to want to work with you.