Commercial Contracts and Negotiations

A collaborative negotiation involves two or more parties working together to achieve mutual goals and desired outcomes. It is best for parties who want to achieve the following:

• Build and maintain strong and lasting business relationships.
• Encourage partnership, creativity, and innovative solutions.
• Mitigate the chances of dispute or trust violations.
• Establish a firm foundation for future collaborations and partnerships.

Also known as a "win-lose" approach, adversarial negotiations emphasize maximizing one party's benefits at the expense of others. It's often best for temporary contracts or when one party hold significantly more power than the other. This approach can create favourable terms and outcomes in circumstances where:

• One party has more leverage than another.
• The business relationship is not a priority.
• Winning is better than compromise.

Developing and practicing negotiation strategies that align with your business goals is crucial to achieving your broader objectives. We recommend practicing and considering the following when creating your strategy:

• Understand Your Goals: Evaluate your objectives and goals and clearly define them in your contract.
• Know the Other Parties: Research all involved parties’ businesses, priorities, and potential contractual risks.
• Assess the Risks: Identify potential risks, such as financial losses, delays, and disputes, and include mechanisms in the contract to mitigate them.

Risk management is essential to defining contractual responsibilities and setting expectations. The following mechanisms help parties reduce risks and unexpected problems in the future:

• Indemnities: These contractual promises define liability and accountability, protecting involved parties from unfair responsibility or consequences.
• Warranties: Warranties assure performance standards, ensuring goods and services meet industry and quality requirements.
• Clear Obligations: You'll minimize potential misunderstandings and disputes by establishing clear obligations.

Contractual disputes occur when one or more parties disagree or misunderstand terms, conditions, or obligations. Some of the most common reasons for dispute include the following:

• Term Ambiguity: When the contract's language is vague, unclear, or open to multiple or conflicting interpretations.
• Liability and Indemnity: Arguments occur over which parties are responsible for damages or losses.
• Payments and Deadlines: Payment for or delivery of services is delayed, missed, or fails to meet contractual expectations.