5 critical contract negotiation checkpoints for a healthy client/supplier relationship…saving time, money, and stress

I always encourage my clients to negotiate a client/supplier business contract, in particular if the parties will have an ongoing relationship.

Business executives sometimes shy away from negotiations. Some think a negotiation is a confrontation that will harm the relationship. Others think it’s simply better to get on with the business and only worry about things when they go wrong. Even when interacting some do not speak up as they feel dependent on the other party. However, honest negotiations are in both parties’ interest as they will allow both parties to:

• Explain and learn what’s important for each party in the relationship;
• Find and define common ground;
• Practice together how to deal with differences, both the talking and listening aspects, preventing or resolving escalated conflict.

One of my clients had terminated a supplier relationship for the same service twice before they realised their own lack of openness and clarity caused both relationships to fail. Of course it is both parties’ responsibility to query and explain.

I have found the following 5 practical negotiation checkpoints to be critical. Applying these during your negotiations will bring both parties closer together, in the interest of a successful business relationship.

1. Understand purpose
   Make sure you understand everything that is written in the draft contract and its practical use. If you don’t fully comprehend why something is written, ask. If the other party can’t explain it properly, suggest it is removed and see how they react. This will clarify the purpose of clauses for all.
2. Express expectations
   Ensure your expectations for the relationship are included in the contract; deliverables as well as process and behaviour. Deliverables need to be defined in relation to business requirements and not a translated entity. You cannot expect the other party to satisfy you if you don’t tell them what you need and expect. Everything that is talked about but not included in the contract can (and often will) be forgotten. Relevant documents can become contract appendices.
3. Anticipate issues
   Use your experience to play “what if” scenarios and include both parties’ responsibilites in the contract. It is a lot easier to talk about these when they are not yet reality. Ensure consequences and remedy strategies of non-performance are included.
4. Balance interests
   Ensure the contract is balanced so that both parties feel a winner and look forward to making the relationship a success. If you feel it is not balanced, find out what is bugging you and address it.
5. Communicate inclusively
   Foster open communications during (and following) negotiations with both entire teams to ensure the spirit and language of the contract reflect what you expect on an operational level, and there are no surprises for anyone.

Effective negotiations will cause some relationships to be terminated early on. That is far better and cheaper than suffering from escalated issues later. Relationships that survive effective negotiations have a level of maturity and robustness that help make the joint experience that follows more successful and enjoyable for all involved.

Workbook

Plutonic Zoo has written a document that provides insights and practical tips on how you can negotiate effectively towards a practical agreement and a sustainable business relationship…saving time, money, and stress. These insights and practical tips have been derived from our hands-on experience for over 25 years with hundreds of negotiations and contracts as buyer, seller, and as an impartial 3rd party advising buyers and sellers. Note that Plutonic Zoo does not accept any responsibility for your actions or results in relation to the information in the document.This document is written in the form of a work book. Apart from insights and practical tips it offers you targeted questions to help you clarify your own situation. It has been written with corporate business negotiations in mind where an ongoing relationship between the parties is valued, but insights and tips are applicable in a broader context.See Table of contents of full work book below.Table of contents Prologue…………………………………………………………………………………. 2 Why negotiate?……………………………………………………………………….. 4 Getting to know yourself………………………………………………………….. 6 Getting to know the other party………………………………………………… 8 Preparing for an upcoming negotiation…………………………………….. 10 Recognising phases of a negotiation………………………………………… 15 Negotiation styles: results versus ego……………………………………… 21 Epilogue………………………………………………………………………………… 22 The workbook is available from www.plutoniczoo.com.au/products.html

Victor Konijn
Managing Director
Plutonic Zoo Pty Ltd
www.plutoniczoo.com.au