Negotiation of Contracts: 10 things to consider
Who are you dealing with? - Ensure that the person you are dealing with is authorised to negotiate on behalf of the other party. If in doubt, ask for confirmation (in writing).
Do you need to keep it a secret? - If you need negotiations to stay confidential, ensure that you enter into a confidentiality/non-disclosure agreement before you start discussing terms.
Expecting to share business sensitive information? - Be mindful of your data protection obligations and satisfy yourself that you have the necessary confidentiality agreement in place.
Don’t exaggerate or mislead the other party - If you do, your agreement may be void and you might have to pay the other party compensation.
Don’t offer or accept any bribes or inducements - This area is heavily legislated. Ensure that you have suitable policies in place and that your staff are made aware of them.
Do you think the other party will try to poach your staff or customers? - Ask the other party to enter into a non-solicitation agreement.
Don’t enter a binding contract by accident! - Make sure that all correspondence is marked ‘subject to contract’ so that both parties understand that negotiations are ongoing.
Are you clear on what has been agreed? - Ensure that all terms are expressly included and clearly drafted so both parties are clear as to what has been agreed and what is expected of them. Include a ‘whole agreement’ clause to ensure that any verbal agreements or offers which may have been made before signing the written contract are not inadvertently incorporated.
Evaluate your position commercially - Each transaction is different: your bargaining power and the overall value of the transaction will vary from contract to contract. Weigh up all the factors, including the financial value of the contract, the commercial importance of the transaction/business relationship and the amount of risk you are exposed to before reaching a conclusion as to what you are (and are not) prepared to negotiate on.
Finally, have you read the contract…? - It is crucial that you have fully read and understood the contract. If in doubt, seek legal advice to highlight any particular risks or liabilities you may be exposed to.
Should you require any assistance in drafting, negotiating or reviewing a contract, please contact a member of our Corporate Commercial team who will be happy to assist.
This briefing just provides an overview of the law in this area, it is not legal advice and should not be treated or relied upon as such. You should talk to us for a complete understanding of how it may affect your particular circumstances.