We know what they mean when they say that in business, “you don’t get what you deserve; you get what you negotiate.” Contract negotiation is the basic step of any transaction with your clients or investors. Your negotiation skills decide the outcomes of contractual deals.
However, there are a few basics of the entire process that you must keep in mind while discussing or negotiating a contract with another party. “…an organization signing a contract should spend more time in negotiating the contractual terms rather than have clauses providing solutions for issues arising in the course of the business”, feels Vaibhav Parikh, Head of Technology Law Team, Nishith Desai Associates. While negotiating a contract, remember to:
- Gather a team to create your negotiation contract, adopting a balanced approach to the negotiating process.
- Make use of time in accordance with your advantages.
- Document all the parts and pointers in the contract in detail.
- List out foreign as well as domestic industry compliance laws in detail.
- Make sure the contract does not prevent you from entering into future transactions and warranties timely payments.
- Ensure the presence of a non-solicitation clause as well as limitations to liabilities.
- Make sure you own the Intellectual Property (IP) rights both during the contract and after its termination.
- Have control over the IP licensed to the other party as well as joint ownership of the IP between the parties both during the contractual period and after its termination.
- Check for the presence of termination and automatic renewal clauses.
- Check for clauses of convenience terminations after reasonable notice and also the fee for the same.
- Ensure the presence of Termination Assistance Services for the transition phase.
Negotiating a contract literally comes down to analyzing and balancing risks and revenues in business. While negotiating, both parties automatically compromise on certain factors of their business processes to reach an understanding. So make sure, even while taking a risk, your revenues are guaranteed. This is where your lawyers will come in handy as they will be carefully able to analyze the legal processes involved and also help you with behaving professionally such that you cannot be accused of malpractices.
Your contract negotiation strategies also involve understanding the other party’s perspectives and business requirements but make sure you do not lose out yourselves. After finalizing a contract, do not lose focus on the terms of the contract. People often tend to sit back and forget about the contractual details once the deal is done. Make sure you do not ignore the finer terms and policies of the contract and think ahead of all possible situations and consequences that can potentially arise.