In The End, It’s What’s In The Contract That Really Counts

by drjim on August 10, 2012

A contract is only as good as the people who will stand behind it

A contract is only as good as the people who will stand behind it

There’s a dirty little secret in the world of negotiations that none of us really like to talk about. We like to think that in order to get the other side of the table to do something, all we have to do is to execute the negotiation process to reach a deal with them, get a contract signed, and then it will happen. It turns out that real life is a bit more complicated than that

How To Get Out Of A Contract

There is no contract in the world that someone can’t get out of if they really want to. As a negotiator who sets up contracts, you need to be aware of this fact. You may spend your negotiation developing a relationship with the other side of the table and the deal that you negotiated with them may be fully supported by both sides. But then things change.

What we need to realize as negotiators is that any deal that is finalized in the form of a contract is only going to be as good as the parties that made it. What this means is that as the other side undergoes changes (people leave, get promoted, change positions, etc.), their commitment to honoring the terms of your contract may waver no matter what we think that the negotiation definition should require them to do..

If the other side decides that they no longer want to be bound by the contract that they signed, there are a number of different steps that they can take. The first is, of course, to closely read the contract looking for loopholes that will release them from their obligations. Failing at that, they’ll look for ways to live up to the terms of the contract while making your company’s life as miserable as possible – perhaps delivering too much, too little, too early, or too late.

How To Prevent The Other Side From Breaking A Contract

Given the simple fact that things change, what can we do as negotiators to minimize the chances that we’re going to create a contract that the other side won’t be willing to live up to?

I’d like to be able to tell you that there was some negotiation styles or negotiating techniques that you could use during the actual negotiations that would ensure that the resulting contract would be supported by both sides. Sadly, there isn’t.

Instead, you’re going to get some very practical advice. The best way to make sure that the other side of the table lives up to their side of the deal is for you to take action early on in the process and get the lawyers involved. Ultimately, you need to anticipate that the other side may someday want to get out of the contract. Providing your legal team with the maximum amount of time to review the contract in order to eliminate as many loopholes and workarounds as possible is your best defense against a change of mind by the other side of the table.

What All Of This Means For You

The deal that your company has reached with the other side of the table is only as good as the contract that both sides have signed. The issue that can come up after the contract is in place is how committed to upholding the contract terms both sides are.

It turns out that even if you conducted a principled negotiation, if one side really wants to get out of the contract, they probably can. There are an almost limitless number of ways that someone who is dedicated to finding a way to break a contract can find to get out of it. What this means for you is that you need to make sure that you use the correct amount of legal talent while the contract is being created to minimize the other side’s ability to do this.

In the end, negotiators need to remember the golden rule of contracts. This says that any contract is only as good as the people who make it!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: If it starts to look like the other side is trying to get out of a contract with you, what steps should you take?

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What We’ll Be Talking About Next Time

Hopefully we all realize that the world is full of folks who have no reservations about resorting to dirty tricks as a part of their negotiation styles and negotiating techniques during a negotiation. As a negotiator this means that you’re going to be encountering dirty tricks all the time no matter how hard you try to conduct a principled negotiation. This, of course, brings up the question: what can you do to defend yourself against dirty tricks?

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