Contract Negotiation, Drafting, and Review
Contract Negotiation
Contract negotiation is the process of giving while simultaneously taking ground. It is rare in life that one party has all the leverage. Even when you think you are otherwise helpless if helps to ask yourself, what do I have that the other party may want? That question can be the difference between a successful and terrible negotiation.
Lawyers are specifically trained to read and understand contracts. That does not mean they make good negotiators. A good negotiator needs to be patient. The negotiator and the client should ask themselves, is the item one of a kind. Items we often think are irreplaceable are not. We create the perception in our minds. That perception causes us to make bad decisions. Sometimes, you need to let the deal go to allow room for a better deal to grow. Managing perceptions, discussing reality, and tracking leverage are all important tools in a negotiators tool kit.
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Contract Drafting
Contract drafting is the process of taking the results of a negotiation and putting it into writing. Although, negotiation and drafting can occur at the same time they are often better left separate.
The goal of contract drafting should be to obtain the desired result for the client while making the deal make logical sense. The logic behind how a deal will be executed is just as important as the final result in many circumstances. Because it is in the process of executing an agreement were most problems arise. A well drafted contract should spell out the expectations that each party has of each other to prevent any problems down the road.
Taking the time to define expectations upfront can often reduce costs on the backend, provide you with a better experience, and make executing the contract less stressful.
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Contract Review
In many circumstances, you may just be handed a contract to sign. Signing your name to any legal document can have real world effects. You need to understand that when someone hands you a pre-drafted contract often times it will be highly skewed in their favor. Depending on the transaction that may not matter. But other times, it costs you an arm and a leg.
Taking a contract to a Lawyer for review is often a good idea especially when you are talking large amounts of money, long periods of time, or otherwise complex transactions. My goal with contract reviews is to ensure that you understand some of the larger points of the contract.
Oftentimes, large points are hidden deep in the contract. As a general rule of thumb, most pre-drafted contracts will have hidden items. But if you cannot read the contract in the time it took for the person to make the sales pitch the deal may not be as good as you think it is.
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