How To Negotiate A Business Contract

Agreements from business contract are meant to be binding and they are meant to last for the duration that was stated but this is not always the case. There are numerous examples of business negotiations that were signed and sealed as it were but ended up in the courts because they were broken by one party or the other.

Going to court may be the right thing to seek redress for a broken agreement but if you ask the party involved, they may never have willingly settled for going to court. That is, they would have preferred that the agreement was not broken in the first place.

In most cases, people signing an agreement after a business negotiation will never want one of the parties failing to meet up their side of the agreement. That is, they will not want to go to court.

Reasons Business Contract Agreements Are Broken

Before we look at tips to having a business contract with enduring agreements, it is important we understand why agreements fail in the first place. Knowing why could be the first step into knowing what not to do. That is, if you can know what causes others to renege on an agreement you will know how to eliminate that from the agreement you sign. This is what we are going to apply here.

Alternatively, there are agreements you cannot help but establish because you have a lot riding on it. The agreement may be fashioned in a way that could show all the symptoms and characteristics of agreements that are broken. Since you must go through with establishing such an agreement, this article will serve to make you prepare for the worst as you now know that the likelihood of the other party reneging on the agreement would be high.

Now, I must also say that there may be no exact rules to this but a couple of the points below may give an insight or two on the matter with respect to being able to tell that an agreement might be reneged upon.

Why Do Agreements Fail?

Agreement May Fail When One Side Feels Hard Done By And React

This may happen if the business negotiation was hostile or competitive. They may have this idea that things would have gone their way or a bit better than what they got out of the agreement table. They may associate it with one or two things that may have occurred outside the negotiation table. That is, it may not have been directly linked to you but because of it they had to accept a lower expectation from the negotiation table.

There are times the other party may agree to something on the table that favors you in a way that it will catch your by surprise or leave you wondering why they capitulated so easily. Feeling hard done by may not be connected to you directly but it will invariably lead to them breaking the agreement.

They might have signed an agreement with you in good spirit and even celebrated the fact. However, the expected result of that deal may surpass everybody’s expectation to the point where what you are getting as profit compared to what they are getting might make them begin to feel that way, especially if they feel they brought more to the table than you.

This can happen in any field. You may have played a critical role to the other party getting that so-called big break, but the break might be such an outbreak that your share of the pie begins to look as if it is more than the sweat you added to the labor.

Agreements May Fail When One Side Feels They Were Cheated

They might leave the agreement table shaking hands but the sense of being cheated might remain as a strong aftertaste. This is more directly connected to what transpired on the negotiation table. There will be a lot of negative energy directed towards you but on a more serious note, there those who will have already started hatching how they will break the agreement while putting pen on paper.

Agreements May Fail When One Side Feels They Were Forced Into Agreeing

The other party feels they have been forced into a corner and had to sign the agreement. You may get clear signals from them that they do not like the agreement they are signing . In cases such as these, there is a tendency that both parties will know where each other stands on the agreement and the person it favors the most might be looking forward to a fight as it were.

The Effect

We have said agreements are broken when people feel hard done by, felt cheated or were forced into accepting the agreement. We must say here that there are of course other reasons, which we did not look at. The other party might just break the contract because they do not have respect for contracts.

Another new development might make the content of the contract either irrelevant or unattainable for one of the parties and rather than call for a re-negotiation, they decide to break it. it could be anything but we focused on the three above so the effects will be based on these three.

They Start Showing Lack Of Commitment To The Terms

The contract may demand that they do some things on a regular basis. You might start getting a situation where they start showing a marked lack of commitment to the contract. How soon they start showing this may depend on the depth of their disenchantment or grievance.

They Start Looking For Loopholes

They might secretly hire lawyers to do this especially if they feel cheated or forced but it actually applies to every case. As long as they start feeling disenchanted, looking for loopholes in the agreement starts
making sense.

Likelihood Of Litigation Looms

The likelihood of litigation becomes high when they are disenchanted as they look to challenge the agreement in the courts. This is the biggest effect of having any of the feelings we mentioned in the first part of this series.

Tips To Having An Enduring Agreement

Consider The Possibility Of a Mutually Beneficial Agreement

It would work to having a more enduring agreement if it is mutually beneficial. You will have to realize that concessions to the other party that do not add real value as such may even quicken the breaking down of the agreement rather than holding it together. You must be able to give concessions in areas that will be profitable for the other party for them to consider the contract in an enduring manner.

It would be hard for them to want to break it if it adds the kind of value they want. This is what a mutually beneficial contract does to both parties. However, not all contracts can be mutually beneficial no matter how you might want it to be but this would serve to prepare you.

Consider The Possibility Of Including An Improvement Clause

Your contract can have a clause that will kick in if certain benchmarks are meant. This would serve to keep the other parties focused on getting something better rather than on what they have on hand which they are not satisfied with.

This kind of clause could work wonders.

It gives them hope
It gives them a chance to make more
It gives you an assurance of continued commitment on their part
It might also increase your profit

The improvement clause could be tied to results or time. It could be tied to both or any other thing but you should make sure that it stays consistent with the purpose of having an enduring agreement. If you set an improvement clause that looks unattainable, it might backfire and cause the agreement to capitulate faster than it would.

Consider The Possibility Of Including A Get-Out Clause

A get-out clause gives the other party something to look forward to as they put pen on paper. They may not be entirely happy with the contract but since it is tied to time or achievement, which they can use to escape it, the contract might look more attractive. Besides, you would be achieving the purpose of having them stay through the duration of the contract.

A get-out clause will also show your sincerity. This is an example of a concession, included in the contract terms that will give the other party a sense of comfort and assurance that they have not been forced or cheated into signing the agreement.

Litigation after an agreement has been signed is not something that both parties would jump in lightly. It would cost them money and this could be the least thing it would cost them. Avoiding litigation because of the breakdown of an agreement is something any business owner would want to do. They can prevent it by taking simple steps that have high impact on how the agreement will go.