How To Accelerate A Contract Negotiation

Do Your Contract Negotiations Drag On Too Long?

PurchTips Edition #335 Click here for the printer-friendly version

Picture of Charles Dominick, SPSM, SPSM2, SPSM3, author of this procurement article on contract negotiation.By Charles Dominick, SPSM, SPSM2, SPSM3

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Believe it or not, a form of etiquette is arguably the #1 way to accelerate a contract negotiation. When a supplier feels like it is being treated unfairly, it will negotiate slowly and cautiously. Using contract negotiation etiquette can speed up negotiations, reduce the risk of delaying a project, and foster a healthy supplier relationship without ceding your positions.

Follow these contract negotiation etiquette steps to avoid a negotiation process that’s too long, difficult, and frustrating.

  • When first submitting a contract to a supplier for review/signature, make sure that every single clause applies to the situation. A supplier’s legal contract review cycle may take weeks, so you don’t want to waste an entire cycle on a supplier simply identifying what doesn’t apply to your purchase when you could have done that in less time yourself.
  • If a supplier wants to propose contract revisions, insist that they use a redlining feature like “Track Changes” in Microsoft Word. While Word still allows you to see what is different between two documents via its “Compare” feature, “Track Changes” makes comparisons easier and feels less sneaky. Use it if you have to revise your supplier’s revision, too. And both parties should always revise the other party’s latest revision, not previous versions.
  • If the supplier proposes changes to your contract, do not respond by unnecessarily introducing new clauses that have nothing to do with the clauses that your supplier could not accept. At a minimum, it makes the supplier feel like its resources spent on its first review were wasted. Worse, it can make you appear disorganized or even unethical.
  • If you haven’t reached agreement after you and your supplier have both submitted revisions, make the next step a conference call, not an email. Insist on the participation of representatives from both parties who have the authority to agree to contract language. This will expedite the ability to find common ground.

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Copyright 2015. This article is the property of the Next Level Purchasing Association and may not be copied or republished in any form without the express written consent of the Next Level Purchasing Association. Click here to request republishing permission.

By Charles Dominick, SPSM, SPSM2, SPSM3

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