Contract Negotiation Series 1

What does negotiation means; when it comes to negotiating contracts. Sure, it does not mean the ‘’stronger’’ party influences the ‘’weaker’’ party to accept their terms and conditions. When the teams are lacking information and the flexibility to compromise, the contract negotiation is exposed to failure before it commences. Most of the time domineering party determines the ‘’rules’’ and the negotiation environment, which is where they push their terms to another party to accept it. 

Nevertheless, a deal is borne by mutual concession, based on both parties understanding to create mutually agreed terms, as both parties can fulfil their business objectives. In the same way, there is no place for conflict between negotiating parties. Only the perception of a conflict can beat the whole negotiation process. The same is true when it comes to the domineering party influencing another party to accept their terms, which is a lack of mutual understanding. Negotiation has nothing to do with an aggressive environment, but having a balanced and amicable approach, where differences are outlined with respect.

Therefore, the negotiation environment is created by the parties’ mindset, which can be visually described as walking on an edge, in which success or failure can be evaluated instantaneously. Thus, the negotiation team leaders have the task to keep their teams within an amicable atmosphere and ensuring a friendly environment for the negotiation process. Moreover, the negotiation teams should understand that they are mutually inter-dependable, meaning that without sellers there are not buyers and vice-versa. 

Nowadays, some contracts fail from the negotiation stage.Both parties sign the contract, but the same cannot deliver the performance as it should.

The main reason is that the contract terms are not set correctly, the performance clauses are not set correctly, and last but not least, the whole contract is not negotiated correctly, where the scope of supply and parties’ responsibilities remain unresolved. Both parties suffer, as none of them can’t meet their business objectives, and contracts KPIs become unfulfillable. As a result, businesses stop trusting each other and communication becomes a pain. Parties realise that the only solution is a new agreement with re-negotiated terms and conditions. 

Veselin Shivachev 

Vedera Consulting
+44 (0) 2381941164


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