Contract negotiation can be challenging. Knowing how to succeed and become experienced in business negotiations is vital for your brand to succeed.
This article will give you a few tips and techniques to start negotiating contracts more effectively. We’ll go through the basic contract creation process and give you the tools you need for successful future negotiations.
Let’s get started!
1. Draft Your Contract
The start of any contract negotiation process is always drafting your contract. Whether you’re merely using contract templates for routine negotiations or individual complex contracts, it’s essential to know exactly how to write an effective contract.
Although you can involve a lawyer or law firm to draft contracts for you, paying a legal team to write an effective agreement is not always necessary. Most routine negotiations need simple contracts, so you must find a suitable template.
You can find dozens of contract templates on Signaturely, all free, reviewed by legal experts, and ready to customize with your data. Instead of printing out your contract and having your signers sign in person, you can use Signaturely to request a digital signature online.
Signaturely allows you to send and receive legally-binding online signatures, permitting you to negotiate contracts with clients and business partners worldwide. Upload your contract to Signaturely, place your signing fields on it, and draft a message for your signers. You can also automate signing your agreement between two or more parties to specify how the contract should be signed.
Signaturely keeps track of your legal documents at all times, lets you see who has signed the document and expedites the signing process through in-app reminders to those who haven’t.
Sign up for Signaturely and start sending contracts online for free.
2. Create Smaller Agreements
Creating smaller agreements is an excellent way of breaking down complex contracts. By breaking out the contract into separate small agreements, you can easily direct your contract negotiations point by point. This can keep the negotiation process on track and keep all parties motivated as they see clear progress by signing a contract once each part of the process is over.
Creating smaller agreements also allows you to break down the negotiation process more favorably for you, letting you group together different parts as you see fit. By creating smaller agreements, you make it easy for contracts to be edited and sent back and forth to be signed, giving all parties a clear understanding of the process.
3. Define Your Priorities
You should define your priorities before the contract negotiations even start. A contract negotiation process can be complex and messy, and losing track of priorities is easy as the business negotiations move along.
Start with a personal list of priorities that can guide you through the process, letting you know where to be flexible and where you can’t. A clear set of priorities can also help you create better negotiation strategies, allowing you to come up with the best deal for all parties.
4. Don’t Overcomplicate Things
As mentioned before, complex contracts aren’t often a great idea since they can unnecessarily complicate the contract negotiation process and easily miss smaller details.
Instead of writing complex articles with multiple clauses, it’s often better to rely on a streamlined contract that details what’s required from each party in simple terms. This lets all parties understand the agreement better and enables you to negotiate immediately.
A clear contract can also prevent any issues down the line, allowing for more transparent processes that are easier to understand and enforce.
5. Do Your Research
If you want to have more leverage, you have to do your research. The more prepared you are, the better you’ll be able to negotiate with the other party.
Start by studying all materials used during the negotiation, like proposed contract terms, along with any presentation or written material prepared for the negotiation. You should also look into the people you’ll be negotiating with, their current jobs and roles within the company, and why they were chosen to negotiate. This insight can give you an idea of their bargaining power and allows you to negotiate better with the other party.
Finally, research the person or company you’ll be negotiating with. Taking a step back to investigate the party you’re dealing with can give you a good idea of their purchasing habits, pain points, and budget.
6. Understand the Other Party
Make sure you understand the person or company you’ll be negotiating with and the reasons why they’re negotiating with you. Returning to research can indicate buying habits, budget, and challenges.
This data allows you to better negotiate with the other party and develop creative solutions that can lead to a win-win outcome. If you understand the other party’s intentions, get a better deal by giving them what they need. Once the contract is active, understanding the other party will help you establish a strong relationship with them down the line.
7. Focus on Facts
The last thing you want during contract negotiations is to allow feelings to factor into the process. Keeping the negotiation factual and professional permits all parties to negotiate a contract they’re more satisfied with.
Instead of mentioning what you believe or assuming what they would like, focus on fact-driven statements to help you negotiate, like stating why the current terms aren’t viable for you. Focusing on facts can ensure a fair negotiation process, allowing trade-offs to happen organically and for all parties to walk away satisfied, regardless of the outcome.
8. Ask Questions
Your research isn’t done when the contract negotiations begin! Use the negotiations to gather more information better to understand the other party’s needs and goals.
Asking questions during the negotiation also allows you to understand the other party’s mindset. This can help you know their style and preferences, allowing you to frame your arguments and proposals better.
Make sure to practice active listening while they give their answers. Don’t interrupt them, even if they don’t get your question right away. You can better understand their strategies and their final goals by actively listening, giving you more bargaining power.
The questions you ask don’t always have to be about the contract! A few general questions to the other people about their interests and their jobs can help you build rapport with them, allowing everyone to negotiate in good faith.
9. Have a Negotiation Strategy
You should have a clear negotiation strategy before you start. Your plan should be firm enough to get what you need from the deal but flexible enough to adapt to the other party’s needs and style.
Plan out your best and worst-case scenarios well in advance, and think about potential trade-offs and other creative solutions to any obstacles you can envision. You can Get inspiration to overcome obstacles with common contract negotiation strategies, such as:
- Asking for what’s fair: This technique focuses leverage industry prices and standards to establish a baseline. It’s up to the other party to make the argument for an exception to the standard or to agree with your proposal. Research all the standards necessary before negotiations start to have this technique ready.
- Offering concessions: A great way to satisfy all parties during a contract negotiation is to ensure everyone feels like they’ve actively made a good deal. It’s often better to prepare a strategy that allows for some amount of push and be flexible enough to make trade-offs so the negotiations can keep moving forward. Start with a very advantageous position for you, and know in advance the items you’re willing to lose or trade during the negotiation.
- Taking control: Another technique for winning negotiations is taking control of everything about the contract negotiation. This may include where and when the contract negotiations will take place, how long the talks will go for, and so forth. You can also take control by summarizing the items to your advantage or by deciding the order in which the negotiation topics will be discussed. Taking control allows you to become a more active party during contract negotiations, making it easier to resolve issues to your advantage.
- Dealing with ultimatums: During a contract negotiation, you may face rigid opposition from the other party, asking you to accept their terms or reject the deal altogether. If it comes to it, don’t be afraid to take the time to examine who really has more leverage and whether or not the deal is worth it. You can also ask all parties to postpone negotiations and reach an agreement later, which can help prevent burnout and give everyone time to come up with creative options to reach an agreement.
By having a strategy beforehand that protects your top priorities, you’ll be better prepared to come out of the negotiation process on top.
10. Keep It Positive
A positive and upbeat attitude is a great way to ensure your contract negotiation goes smoothly. Don’t lose a chance to agree with someone or let someone know they are right.
A friendly attitude can also help you work with the other parties and foster a collaborative attitude, where everyone works together to agree on the contract and make the deal happen.
You can do it by making sure you start and end your contract negotiation meetings on a good note and even agreeing to smaller concessions where they aren’t needed to show you’re negotiating in good faith. Keeping a positive attitude during the negotiation process can help ensure the other side feels comfortable and more willing to work with you to find solutions and reach an agreement.
FAQs About Contract Negotiation
Here are answers to common contract negotiation questions:
The basic five stages of negotiation are preparation, exchanging of information, clarification, bargaining, problem-solving, and executing. Preparation is the research stage, where you gather the information that can be relevant to the contract negotiation. Once the parties start to interact, they will start exchanging information so you can establish each other’s trustworthiness and competency and see how well your interests align. Then, during the clarification stage, all sides continue exchanging information to polish disagreements and clearly signal where each stands. This leads to the bargaining and problem-solving stage, where all sides, knowing what all parties want, try to compromise and reach an agreement. Finally, the executing stage is the conclusion of the negotiation process, where all sides establish their agreement, thank each other, and sign up and follow up on the contract.
The first step often overlooked during contract negotiation is preparation. Make sure to research the parties you’ll be negotiating with and the topics you’ll be negotiating. Know who are the members of the business teams you’ll be dealing with and why they want to negotiate with you. Next, once the negotiations start, you’ll need to keep gathering information on the other side, their wants, needs, and expectations. Here, you can see if your interests align with theirs and what each party can gain. As differences arise, you’ll need to negotiate them and reach compromises. The last step is to put it all in writing into a valid contract and have all parties sign to it to certify their agreement.
As mentioned, preparing before the negotiation starts will always help you and give you the edge over the other party. During negotiation, good communication is vital. That’s why you must practice listening actively and carefully to what they’re saying to better understand the other side. With enough practice, you’ll be able to devise creative solutions to your issues, allowing you to improve your negotiation skills and reach a win-win scenario often.
What You Need to Remember About Contract Negotiation
As we’ve seen, contract negotiation can get somewhat complex, so it’s always better to ensure you have the tools you need to simplify the process. With Signaturely, you can ensure that, once the contract is agreed upon, every party can sign it immediately from any smart device.
Sign up for Signaturely and start sending contracts online for free today.
