The success of most contract negotiation processes can be measured by:
- the quality of the resulting contract, in terms of faithfulness to the parties’ intentions, proportionality, certainty and clarity;
- the length of the process and the costs incurred during the process; and
- the resulting attitudes of each party with respect to the contractual documentation and, more importantly, each other.
Although not every contractual negotiation can be measured against these principles – for instance, dispute settlement agreements are rarely going to lead to mutual respect – they hold good for most.
Some common contract negotiation tactics will make it harder to achieve these goals. In this post, I’ll discuss a handful of the more prevalent and pernicious.
(1) Interest maximisation
When a lawyer asks a client what approach to take in a contract negotiation generally, the client will usually say a reasonable and balanced approach, albeit one that protects the client’s vital interests. But when a lawyer ask a client what approach to take in respect of a particular issue, the client will often demand maximal rights and minimal obligations. Contract negotiation is about give and take, and if you don’t give, you often won’t get the chance to take. Establish your real vital interests at the outset, and don’t get sidetracked trying to win points of marginal significance.
If you don’t fully understand the legal and/or practical nuances of an issue, then don’t just bluff your way through it. You’ll damage your own reputation – the other wide will know your bluffing – and frustrate the negotiation process.
(3) Ignoring points
It’s most aggravating for a contract negotiator to have his or her carefully argued points ignored. A blanket refusal to consider a set of suggestions, no matter how well founded, can really raise the level of acrimony. If you can’t accept any of the other party’s suggestions, then have the courtesy to explain why.
(4) Confusing with complexity
It’s sometimes tempting, particularly when faced with an inexperienced counterpart, to draft contractual provisions in such a way that they are hard to understand, and therefore hard to amend. Don’t be tempted! The more complex the clause, the more room for errors and varying interpretations.
(5) Compromise by ambiguity or vagueness
In order to compromise an issue, negotiators may agree an ambiguous or vague clause, allowing each party the comfort of its own interpretation. This is parking an issue, not resolving it. If the issue is sufficiently important to the parties that neither will concede it, then it’s sufficiently important not to be parked for later resolution.
These five tactics share a tendency to make it harder to reach the goals mentioned above. There are lots of other negotiating tactics that will have a similar effect – feel free to add to my list using the comments form below.