Gordon Law


The negotiating mindset

Each and every day, in a multitude of ways, we all negotiate. Whether you are negotiating with your spouse, your child, your coworker or on a multi-million dollar contract, your mind goes through similar processes. Ultimately, you want a specific reaction or response and you have to engage in give-and-take to achieve it. Oftentimes, you do not get precisely what you want, but ideally you get the result with which you can live.

The skillset you need to reach compromise in your day-to-day exchanges is similar to the one you need to successfully negotiate a business contract. You already have, within your mind and life experience, the tools to do this. Although there are legal elements to a contract, within your negotiations you need only focus on the concept that a contract is simply an agreement. The important points to that agreement can be answered by the following questions:

  • Who is the agreement between?
  • Who gets what for what and when?
  • What do you have to do?
  • What should you avoid doing?
  • If you come to an impasse with the other party or parties, how do you figure things out?
  • What happens if one party does not play by the rules?

Before a face-to-face meeting across the table, you need to know what your end game is and that you may experience challenges in achieving it. In making this determination, consider your starting position. A successful negotiator sees these positions on a continuum and knows the end goal, what must be achieved, what can be forgiven and what will cause an impasse.

Once you know what you want, you should consider how you are going to get it. The other side may be an adversary or simply an opponent, pleasant or unpleasant. Either way, emotions and personal feelings should be left outside the process. If you like the other person, you may very well give in on points you should not. Equally, if you dislike the person, you may find you are confrontational on points not worthy of dispute.

It is vital to know that once you conclude your negotiation, assuming a contract has been entered, a relationship has been established. That relationship may be a landlord/tenant relationship, vendor/purchaser relationship or employer/employee relationship. How the negotiation begins may dictate what that relationship will be into the future. As the relationship advances, consider there will likely be other negotiations.

Once the other party is established, you need to identify the deal points of your agreement. Typically, this will fall into four categories: subject matter (who is getting what and who is giving what); price; terms of payment (lump sum vs. over time); and time frame of the contractual relationship.

Beyond negotiation of the deal points, terms of a default or breach of the agreement also need to be negotiated. Defaults can be either financial or non-financial and can generally be cured without a termination of the contractual relationship. A breach is when one party has so substantially broken the contract that the other party can take legal action.  When negotiating a contract, you should be assertive in defining what constitutes a default and what constitutes a breach. Know that if you negotiate these items ahead of time, you will have greater control of how the contract is performed.

Armed with the knowledge that a default or breach may occur – if they did not, there would not be so many lawyers working – you should also negotiate how the parties are going to resolve a dispute. While setting forth deal points with the other party, discuss whether mediation, arbitration or litigation will be used to settle the dispute. Also, pay attention to finer points such as consent to jurisdiction or outside venue; whether the right to a jury will be waived and if there is a provision that one party can recover attorneys’ fees from the other in the event of a dispute.

Finally, you have the ability to negotiate the potential remedies the parties have at their disposal in the event of a breach. This is key to understanding the scope of your exposure.

Overall, the more prepared you are prior to your negotiation, the higher the likelihood of achieving your desired outcome.

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