I hope that you have enjoyed the article, “How To Accelerate A Contract Negotiation.”

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Some of you may be surprised that etiquette is a key to getting contract negotiations to a successful close rapidly.  Others may think that using etiquette would “soften” one’s negotiation power.

Not the case.

To illustrate the power of contract negotiation etiquette, you have to understand what goes on psychologically when etiquette is not employed by the other side.  Let’s walk through examples that correlate to the numbered paragraphs in the article…

  1. Contract templates and a legal department with political power can make you lazy in procurement.  Instead of applying critical thinking to contracting efforts, you may be tempted to simply give the supplier your template.  Bad move.  When you do this, the likelihood is high that you’ll be including something – like an unreasonable insurance requirement or payment terms that are inappropriate for the industry – that doesn’t apply.  This forces the supplier to “correct” you, which essentially becomes a new negotiation.  This is unnecessary and counterproductive.  You’re smart.  You should be able to go through a contract template within an hour and pick out the parts that are obviously not applicable to the deal and delete them (with management and/or legal approval, as appropriate).  Doing so can shave weeks off of a typical negotiation and prevent the supplier from feeling that you’re forcing them into a battle they didn’t sign up for.

2.  Word’s “Track Changes” feature makes it easy to spot changes to a contract so that you can focus your negotiation efforts on only those parts of the deal where your organization and the supplier disagree.  The feature has become so common that it can feel sleazy to a party when it receives from the other party a revised contract that doesn’t use it – especially if Word’s “Compare” feature reveals dozens of changes!  Therefore, etiquette suggests that both parties use it to help the other party identify where the discrepancies are.  But you always have to make sure that no versions were skipped when a new “Tracked Changes” contract comes across your email.  If the supplier redlined a previous version, the most recent changes you negotiated may not be represented.  And if you similarly were to ignore a supplier’s changes, they would have the right to call you out and question your integrity, so be careful yourself!

3.  This kind of ties in with the preparation required for #1.  Just like you should make sure that the first contract you present to a supplier should not include anything irrelevant, you should also make sure that the first contract contains everything it should include.  Say, when responding to your first contract submission, your supplier objects to the amount of insurance it is required to maintain and, in the next revision, you revise the insurance clause but add an unrelated and onerous liquidated damages provision, that just feels wrong.  Like, why wasn’t that there in the first place?  Is it due to incompetence?  Or is someone playing a game or being unethical?  Don’t allow yourself to appear incompetent or unethical in this regard and don’t tolerate such bad etiquette from your suppliers either.

4.  After each part has made one revision to the original contract and agreement is still not reached, it should be clear that emailing contracts with Tracked Changes isn’t getting the deal to closure fast enough.  In many cases, it is simply a matter of decision-makers not understanding why the other party needs the language they are asking for.  We live in a world where it is practically a line item in everyone’s job description to protect important people’s time.  But, sometimes, a 10-minute phone call between decision-makers can result in the understanding necessary to find common ground so that a contract can get signed.  Insist that suppliers bring their decision-makers to the conversation and do the same yourself.  If one party does and the other doesn’t, the one that doesn’t is employing bad etiquette and is likely the cause of unnecessary delays.

I hope that these additional insights help you understand the not-so-obvious benefits of using etiquette to be a more efficient and effective contract negotiator.

 

Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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