Gain A Competitive Advantage In Contract Negotiations - Phillips

How To Gain A Competitive Advantage In Contract Negotiations - Houston Business Attorneys

One of the most common pitfalls in contract negotiations is impatience with anything that impedes or delays a contract getting finally approved.

The decision to charge ahead before an agreement is completely in place usually comes after a round or two (or more) of complicated issues have been hammered out and only an item or two is left to resolve.

The feeling is that those items can be addressed later since the most significant issues have already been tackled.

"Patience in contract negotiations --- is your competitive advantage."

--- GREGORY L. PHILLIPS, HOUSTON BUSINESS ATTORNEY

The relationship between both parties may be good. You may know each other better now, and decide to let some time go by and address those final issues later.

The reality is this may bring about the relationship's undoing.

Putting off tough issues does not make them easier to resolve later or magically make them go away.

Once the relationship has started the other party may now have less incentive to compromise, especially if you've already done your part in the deal.

Prevent the undoing of what you've already accomplished. Embrace the fact that it is very common for both parties to exchange multiple drafts of important documents as they resolve compromises and close in on their differences.

Patience in contract negotiations --- is your competitive advantage.

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16 Tips To Tackle In Contract Negotiations

1. An effective contract should always be clear, specific, and focused.
2. Share the business motivations behind the deal with your lawyer. When a lawyer understands the purpose of your contract, he/she adds more value and mistakes are less likely.
3. During contract negotiation, wise negotiators recognize and prepare for the possibility of a contract breach. Consider steps that can reduce the risk of a full blow up and breach, like including a structure for the parties to meet regularly to review progress and performance during the life of the contract.
4. Consider whether a dispute-resolution clause in your contract might head off costly litigation by requiring parties to engage in mediation or arbitration before filing any lawsuits.
5. Transparency in everything is not required, but honesty is. Do not mislead in any way; that creates a lack of trust, either immediately or after the truth is found out by your business partner.
6. Take time to read the completed contract yourself. Encourage your counterpart to read it carefully as well and then discuss any areas of confusion with your lawyers.
7. Ask your lawyer to write the contract in “plain English.” Ask follow-up “What if?” questions that probe the boundaries of deal conditions to make sure you’ve covered all the bases.
8. Think of negotiating a contract like eating an elephant. You should do it one bite at a time. Start by tackling some of the easier aspects first. Focus on gaining some momentum.