Contract Negotiation and Writing Tips

Individuals and companies, particularly small businesses, negotiate and enter into contracts frequently in the course of business.

Some business agreements are simple enough for the typical person to draft using contract templates. Some agreements are a verbal agreement and a handshake. Other contracts, such as real estate contracts or complex business deals, may need the negotiation skills of a contract attorney.

The ideal end result should be confidence that you got the best terms for your business and that a well-drafted agreement that avoids potential litigation is in place. Below are tips on negotiating and writing a sound business contract.

Negotiating Tips

Before your negotiation meeting, consult with your legal team to fully understand the legal terms and implications of the contract. These steps are key to ensuring successful contract negotiations. These contract negotiation strategies are especially important for startups where the stakes can be high.

Certain fundamental strategies will help you in the day-to-day business negotiations that all businesspeople perform in contracts and other business transactions.

The following are a few suggestions to get you started on the road to effective negotiation tactics:

• You should always have clear objectives. What are your top priorities? It helps to make a list of goals before meeting the other party.
• It is important to go to a negotiation having done your research. Know relevant laws, facts, and figures.
• Consider what you really need to get from the other party
• Decide in what areas you are willing to compromise.
• Build trust with the other party. Trust will aid communication.
• You may want to have a first draft of an agreement written before meeting with the other party.
• Try to keep the discussion ordered when meeting with the other party. Make a checklist of topics to discuss during the negotiation.
• Listen to the other party and their concerns.

When negotiating contracts, remember that the bottom line isn't just about the contract terms but also the business relationship. Remember, those with whom your business is negotiating will also work hard to leverage the deal in their favor. Don't be afraid to take a firm stand on your key requirements, but also remember the value of offering concessions to reach an agreement.

Contract Drafting Tips

Understanding the basics of contract drafting is helpful even if you rarely draft your own contracts. Consider the following tips for drafting a contract:

• An effective contract should always be clear, specific, and focused.
• Keep sentences short to avoid unnecessary complexity and ambiguity.
• You may want to look at sample agreements before drafting your own.
• Make sure all party names are accurate. Include their business titles if applicable.
• A contract should be consistent in its tone, grammar, word usage, and abbreviations.
• Outline the contract to aid clarity and allow for quick reference to certain clauses.
• Define important terms.
• Anticipate litigation by including sections about venue, choice of law, and attorney fees.
• All parties should sign the contract, including business titles if applicable.
• Number the pages of the contract. Avoid the appearance that pages may have been added after the agreement was signed.
• As with any business writing, proofread very carefully.
• Always ensure that the deliverables are clearly outlined and agreed upon in the written contract.

Whether you're negotiating contracts for a large corporation or a small business, these tips will help you to:

• Secure better contract terms
• Foster stronger business relationships

Talk to a Lawyer Before Negotiating a Contract

For small business owners, contract negotiation can be intimidating, especially when dealing with complex contracts. Most contracts are legally binding. But they don't always go according to plan. A business law attorney can help. Consult a business and commercial law attorney before negotiating or signing a contract.

See FindLaw's Drafting Contracts and Contract Law sections for more articles and resources.