How to Negotiate a Contract
Individuals and companies negotiate and enter into contracts fairly frequently in the course of business. Some business agreements may be simple enough for the typical person to draft, and may just be a verbal agreement and a handshake, while others may require the help of a skilled contract attorney. Whatever you decide to do, make sure you have a business lawyer review and/or draft the contract before you sign it.
In either case, the ideal end result is confidence that you have negotiated the best terms for your business and created a well-drafted agreement that will avoid any dispute or potential litigation. Below, you’ll find tips on negotiating and writing a sound business contract.
Strategies for Negotiating a Contract
Certain fundamental strategies will assist you in the day-to-day negotiation that all businesspersons perform, in contracts and other business transactions. Remember, those with whom your business is negotiating also will be working hard to leverage the deal in their favor.
The following are a few suggestions to get you started on the road to effective negotiation tactics:
- You should always have clear objectives. It helps to make a list of goals before meeting the other party.
- Build a relationship of trust with the other party. Trust will aid communication.
- Establish Rapport with them – talk to them about what they are interested in – for example, if you see a picture of them fishing, talk to them about fishing before you get the nitty gritty of the contract.
- It is important to go to a negotiation having done your research. Know relevant law, facts, and figures.
- Consider what you really need to get from the other party, and also decide in what areas you are willing to compromise.
- Be sure that you get small yeses from them in the beginning – the more they say yes to you the better it is – for example – it’s a nice day, isn’t it? Yes, it is…
- You may want to have a first draft of an agreement written before meeting with the other party.
- Try to keep the discussion ordered when meeting with the other party. Make a checklist of topics that should be reached during the negotiation.
- Listen to the other party and their concerns.
Business Torts and Business Law
Intentional acts in which one party unlawfully causes another party some degree of economic loss are referred to as “business torts” (or “economic torts” in the broader sense). These types of torts do not arise from financial losses related to personal injury, emotional distress, or damaged property. Instead, business torts involve an intangible financial loss from some other cause of action, such as a conspiracy to fix prices, interfere with a contract, or otherwise restrain trade. The types of intangible losses that result from business torts include a loss of customers, inability to operate in the market, or damage to your organization’s reputation.
Restraint of trade is not a tort in and of itself, but rather a legal doctrine (based on common law) that relates to a relatively broad and fluid range of torts. For example, tortious interference is a type of business tort in which one party interferes with a contract or business relationship. The party directly impacted by the interference may seek damages limited to the specific transaction by filing a tortious interference claim. However, the plaintiff may also file a restraint of trade claim if they are able to prove that the interference hindered their ability to conduct business in a broader sense. If the interference of a contract damaged the company’s reputation, for instance, then it may give rise to a restraint of trade claim.
Some acts that give rise to a restraint of trade claim may seem entirely legal. For instance, two competing business owners discussing their pricing plans over a round of golf are exercising their freedom of speech. They may not come out and say it, but the subtext of the conversation may be construed as a conspiracy to fix prices if that is ultimately the result of this conversation. Thus, a third competitor who is driven out of business by the resulting price-fixing may file a restraint of trade claim.
What to do Before You Negotiate a Contract
Since contracts are legally binding and don’t always go according to plan, it makes sense to negotiate shrewdly, understand all of the terms in a contract, and make sure you’re prepared should the agreement go south. Consider speaking with a business and commercial law attorney before negotiating or signing a contract.
Free Consultation with a Utah Business Lawyer
If you are here, you probably have a business law issue you need help with, call Ascent Law for your free business law consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506