You're negotiating a contract. What are the most common mistakes to avoid?

In contract negotiations, a common pitfall is the 'fixed-pie' assumption, where one party's gain is seen as another's loss. Instead, adopt a 'blue ocean' strategy. Focus on creating value through innovation, not competition. By broadening the negotiation scope to include potential areas of collaboration beyond the immediate contract terms, you can uncover opportunities for joint value creation that benefits all parties. This approach can transform adversarial negotiations into partnerships for growth.

Failing to research thoroughly on relevant laws, industry standards, and market conditions Misunderstandings and miscommunication between parties. Ambiguous language No attention to details, e.g., deadlines, payment terms, and dispute resolution. Ill-defined scope of work. No / faulty risk allocation between parties. Mad Rush to close. Discussing only money.

Taking a win/lose attitude. The best deals are win/win! In some cases it is actually better if the other sides perhaps wins more than your side - why? They will do all the work to keep the relationship favorable freeing you to focus elsewhere. Not understanding your own key success factors and/or not understaning the other sides key success factors. Focus upon what matters most to each party and flex on trhe rest. Not building in 50/50 sharing of cost improvements regardless of which side had the idea.... it takes both sides to implement so you will get there much faster when everyone has skin in the game. Not including volume tiered pricing where applicable.... if you expect to growm negotiate in your future savings up front.

Customer empathy is critical, as is substantiating one’s position with accurate data. Being transparent is typically far more helpful than harmful. It is my experience that a well managed sales process typically results in the elimination of the negotiation stage altogether.

For me, the most common mistake in negotiating a contract is not looking at it from the "other side". By putting yourself in their position and really understanding what they want, you can often negotiate better terms, more suitable conditions and deliver a "win win" for both parties. We must not forget that both parties should want a successful contract, both should understand each other and they should have done their homework to understand the benefit to BOTH parties of completing it. Of course you need to document it correctly and many other things, but when you truly understand what the other side wants from the contract, you can deliver success both ways.

Avoid this major pitfall through active listening with curiosity: 1. Research counterparts' interests, motivations and constraints beforehand. 2. Make mindful listening, not speaking, the priority when talks start. 3. Allow others to voice perspectives without interrupting them. 4. Draw out concerns through thoughtful, engaged questioning. 5. Periodically summarize discussions to validate nothing is missed. 6. Identify mutual interests with curiosity to spark creative problem-solving. 7. Build trust and flexibility by ensuring parties feel deeply heard. 8. Focus on collaborative win-wins versus positional battles. 9. Approach the exchange with an openness to learn and understand.

I have found that we are often waiting for an opportunity to sell rather than listening for the customer to reveal the true need.

Being a commercial lawyer working for big industries for more than 20yrs, I firmly convinced that listening is the best a lawyer can do to draft and negotiate a contract which reflect business' needs.

Common mistakes to avoid while negotiating a contract include: **Not Building Relationships** **Neglecting Future Contingencies** **Lack of Preparation** **Neglecting Clear Communication** **Ignoring Legal Advice** **Rushing the Process** **Focusing Solely on Price** **Overlooking Termination Clauses** **Unrealistic Expectations** **Excessive Concessions**

I would add that an important way to actively listen is to be silent. The more you speak the least you allow the other party to speak. Silence provides the room for the other to express their goals / concerns and flexibility points. The other party will often say more than it initially wanted to disclose if you can manage silence appropriately.

In my experience, before reaching the documentation stage, it’s all always worthwhile to communicate a summarised perspective to the other party highlighting the common grounds of agreement. This will help avoid reopening of issues involved at the documentation stage

Clarity of communication can help to achieve goals more effectively and efficiently. ??explain rationale of key points, where necessary ??checking if assumptions are valid, and ask for confirmation ??active listening in order to respond to questions promptly and properly ??respectful and effective in communication to enhance collaboration and avoid any misunderstanding.

Explicitly documenting what you are going to do (Inclusions) in a contract is normal, but what is often overlooked is explicitly documenting what you are NOT going to do (Exclusions). Not addressing exclusions early and often can lead to issues during the execution of a contract or project. I always try to communicate this and be as transparent as possible.

Tied to a lack of communication is assumption-making: assuming something is fact and acting on it versus taking the time to confirm is one of the fastest ways to derail a negotiation, or to shatter the goodwill previously built in a relationship. "Do I have this right?", or "Is there something else I should know about this?" are some of the most important - and often unasked - questions we have. Take the time to recap frequently, to limit assumptions, and to confirm what you believe to be true actually IS. While it may seem pedantic or awkward at times, it's guaranteed to reap benefits.

Transparency is the key for any contract to avoid future problems. Clear terms and conditions on all clauses and remarks are also valid for a complete contract duly covered for both parties.

Remember that the person sitting across from you has goals, responsibilities, people they care about, and perhaps even anxiety about what you’re doing together - just like you. The best outcome is when both parties get as much of what they want as they can. Scorching the earth and ending at a place where one party gets most everything isn’t the outcome or the reputation you want.

Flexibility in contract negotiations is a key aspect of successfully closing deals. You always must find middle ground in every situation, particularly in non dea breaker aspect of the negotiation.

A common mistake is assuming flexibility is only possible with terms relating to money like pricing and term. But it’s important to remember that the entire contract can be changed in some way. You can sometimes obtain a better deal by negotiating penalties for SLAs instead of pushing for better pricing. You can negotiate the ability to terminate without cause, and that is more valuable than a few extra discount percentages, particularly when locking in a long term agreement. In short, think outside of just the cost and try to look at how you can “win” the negotiation in other ways.

Perhaps some other experts have pointed this out. Some of my most successful negotiations involved coming up with creative solutions when several initial attempts had not made significant progress. Be flexible to accommodate the other's side interest. It is not a positional transaction that results in one winner and one loser. It must be a win-win deal, and to get that point, be flexible re what you could accept, and what you could accommodate.

Ninguém “ganha” todas. A estratégia da boa negocia??o é entender os pontos que podemos aceitar e aqueles mais críticos. Saiba escolher as batalhas!

One of the common pitfalls of negotiating a contract is not fully documenting the scope of the contract. Without clear limits on the scope of work, you are always risking to enter into long discussions on "who does what". If the scope is well defined, it allows stakeholders to move fast with execution.

Incoterms. Clearly define the incoterm under which each shipment will be conducted so it is clear who is responsible for import/export clearance, transportation, loading/unloading, final delivery. Don't assume the other party will be the importer and pay duties and taxes. It may end up being you. Not planning for these costs can be mean a big surprise.

The most issue, in my opinion, is a delivery conditions. This chapter is most important , after the payment terms. Because on the delivery condition, both parties should decided in which condition side will sale and another side will buy the aircraft.

A common mistake you can make when negotiating a contract is not documenting the agreement. This means not writing down the terms and conditions, not reviewing and revising the contract, not signing and dating the contract, and not keeping a copy of the contract. This could fdrive to a potential risk for enviroment, people and operation

A common mistake in NDA’s is to forgot to add in appendix the documents already transferred and known as confidential. It allows to cover for example the information sent to initiate the négociation itself. Even if it doesn’t seem strategic at this time, the information that your company A is working with company B could be a confidential information

In contract negotiations, a common pitfall is ‘Anchoring Bias’, where the first offer becomes a psychological anchor that skews the subsequent discourse. To counter this, flip the script by establishing a ‘Bracketing Range’ for terms. Present a range that brackets your ideal outcome, which can shift the anchor point and expand the negotiation space. This strategy not only mitigates anchoring but also introduces flexibility, steering the negotiation towards a more favorable middle ground and increasing the chance of a successful outcome.

One thing I’ve found helpful is seeing every contract as a foundation for long-term relationships, not just transactions. A common oversight is neglecting the relationship aspect post-signing. Actively seeking feedback and engaging in regular check-ins can unlock opportunities for collaboration beyond the initial terms. Beyond just avoiding breaches or fulfilling obligations, this leads to fostering innovation and partnership growth. This mindset shift can turn a good deal into a great, evolving partnership, opening doors for both parties to innovate and adapt together. Always look beyond the contract itself to the potential of the relationship it represents.

Well, most of the negotiations may need to have multiple parties from both sides leading by a procurement professional. Example: In a software agreement negotiation, collaborating and following up with multiple parties such as Information security, data privacy, legal, insurance, communications, business units, procurement, finance, risk, compliance, etc are the core responsibilities of a procurement leader. Likewise, need to understand the suppliers multiple channels in their organization. A procurement professional should be a pivotal member in a negotiation to follow up with relevant parties in order to have a successful outcome of negotiations on time without any unnecessary delays.

It is very common to forget each of the agreements in an operational contract until a problem comes up. In order to prevent akward situations with your providers, it's important to agreed control points with certain frequency. This points should be clear for both parts, sticked to the service or product provided and fair, with the intention of develop a high performer provider from one side and a high performer team from the other side.

Not following up in a contract negotiation can lead to delays, overlooked details, and missed deadlines, jeopardizing the timely completion of the agreement. It can create uncertainty and confusion among parties about the status of negotiations and their respective obligations. Additionally, failure to follow up may indicate a lack of commitment or professionalism, eroding trust and confidence in the negotiation process. Ultimately, it can result in missed opportunities, strained relationships, and even the collapse of the negotiation altogether.

In my experience - about 40 years - and based on the worst mistakes I have made in negotiating IT contracts, listen carefully and thoughtfully to the other side’s viewpoint. And don’t try to screw them. There’s a lot of talk about “win-win”. You must be prepared to concede to get a long-lasting, workable deal.

Don’t bid against yourself. If the opposing party rejects your proposal, ask them for a counter instead of offering the next proposal.

One of the most common mistakes in negotiations is the assumption that the pie of resources is fixed. This fixed-pie mindset leads us to interpret most competitive situations as purely win-lose. Of course, a small percentage of negotiations are distributive but in organizational negotiations, far more issues than price are typically involved, including delivery, service, financing, bonuses, timing, and relationships. For those who recognize opportunities to grow the pie of value through mutually beneficial trade-offs among issues, the complexity of such negotiations is an asset. For instance, buyer and seller negotiating a purchase might both be satisfied by increasing the order size and slightly decreasing the price per unit.

In my experience, drafter has the tendency to “assume” . Assume they understand, assume they are clear. Assume they are kind enough to agree for any gap. Well, Dont assume. Make it clear, make it precise, make it detail. It may takes your time now to draft, but it wont take a toll to point it out in case of dispute in future.

Selling yourself short on fees. If you're in tune with market rates, you shouldn't have to compromise; and if you're forced to, it probably isn't worth it.