16 Tips To Help You in Successfully Negotiating a Contract
By Jennifer Herrity
Updated August 25, 2022 | Published November 5, 2020
Updated August 25, 2022
Published November 5, 2020
Jennifer Herrity is a seasoned career services professional with 12+ years of experience in career coaching, recruiting and leadership roles with the purpose of helping others to find their best-fit jobs. She helps people navigate the job search process through one-on-one career coaching, webinars, workshops, articles and career advice videos on Indeed's YouTube channel.
Contract negotiation involves two or more parties developing an agreement on a set of legally binding terms. Throughout your career, there may be times when it might be necessary to negotiate a contract with an employer, client or business partner. Whether you're discussing the terms of a job offer or a client agreement, it's important to implement successful negotiation strategies to leverage your position properly.
In this article, we define contract negotiation and provide 16 tips to help you negotiate a contract successfully.
What is contract negotiation?
Contract negotiation is the process of discussing the terms of a written agreement before choosing to proceed with it. This conversation typically occurs between two parties, such as an employer and an employee. Contracts are any written document that contains a set of legally binding terms, such as an employment contract or a non-compete agreement.
During contract negotiation, you may discuss different aspects of a contract and eventually come to an agreement with the other party. When negotiating terms for yourself, such as a higher salary after a job offer, it's necessary to leverage the advantages you might have to appeal to your employer. The goal of a negotiation is to agree on the best possible terms for both parties.
16 tips for negotiating a contract
Here are several tips to help you with negotiating your next contract:
1. Choose a method for negotiation
How you negotiate likely depends on the particular type of contract that you're discussing. If it's a simple contract, you may be able to come to an agreement over email or with a phone or video call. More serious contracts may require you to meet in person. Make sure you communicate with the other party to choose the correct method for negotiation. If you're meeting multiple times, consider recording the conversations so you can remember what to discuss further when you meet again.
2. Take notes
If you can't take notes yourself, designate someone, such as a colleague, assistant or secretary, to take notes for you during your negotiation meeting. This can help you remember what you want to say during the meeting and what you may want to address the next time you interact. After the meeting, take the time to review and type your notes and save them in a folder that's easily accessible.
3. Know your priorities
Start the negotiation by outlining your priorities, or the initial terms you want to accept or decline, and let the other party share what's also important to them. You may find that you both have similar goals and values, which can make the rest of the negotiation process easier. Even if your ideas differ significantly, understanding each other's properties can help you develop a more fair agreement. In addition, consider ranking your priorities in order of importance before you begin negotiating.
4. Prepare alternative terms
In addition to considering your priorities, prepare a few alternative options that you might settle for in case the other party isn't able to accept your terms. Make sure you only mention these if the other party is challenging what you've already presented so you can build rapport with them. To ensure that they understand your position, wait until they're finished stating their own.
5. Understand what you want vs. what you need
Think about what you need from a contract, such as additional pay, and what would simply be a nice additional perk, like additional paid time off. By being straightforward about your needs, the other party can realize that they are non-negotiable. For example, if your team needs specific resources to complete tasks, share that you can only complete your work if the other party provides them. Try to emphasize your needs over the things you want so the other party understands what's most important to you.
Related: How To Negotiate Salary: Asking for More Money After a Job Offer
6. Consider time constraints
When negotiating the terms of a contract, consider how long everything may take. For instance, when agreeing to do a project for a client, write out how many hours you plan to spend on it. Decide if you want them to pay you a flat rate or on an hourly basis. Consider what might happen if the project takes longer than you anticipate, and clearly outline any milestones or deadlines you need to achieve.
7. Discuss risks and liabilities
Make an effort to consider any challenges or obstacles you may encounter over the course of your contract. Create plans that both parties can follow in case something were to happen. For example, if you're accepting a position in a high-risk industry, it's useful to discuss who might be liable in case of an emergency. In addition, it's beneficial to understand what may occur if one party isn't able to fulfill all their promises and how it might affect the other party.
8. Discuss clauses
Most major contracts, like non-compete, dispute resolution or confidentiality agreements, contain clauses that outline the conditions under which the contract is legally enforceable. Clauses may also include additional terms that aren't in the main sections of the contract. When discussing a contract's clauses, it may be beneficial to hire a professional who can help you review the full terms included in each clause. This can help you review things you might otherwise miss and strengthen your negotiating position.
9. Research the other party
Consider learning as much as you can about the other party so you can understand their perspective before you begin the negotiation process. Conducting background research can also help you understand what to expect in a negotiation and can increase rapport. For example, if you're negotiating a promotion, it's beneficial to research the typical salary that the company has offered employees in the same position previously.
10. Consider the other party's perspective
While it's beneficial for you if you're able to negotiate the terms of the contract to function to your advantage, it's also important to consider the full perspective of the other party. Think about how you can compromise with them in a way that's mutually beneficial for you both. By working to better understand the other party's thought process, you might be able to create realistic solutions that allow you to both feel content about the contract's terms.
11. Remain reasonable
Remain polite and professional throughout the course of your negotiation and use facts in any claims you make, rather than relying on your emotions. Try to demonstrate that you care about what the other party thinks and practice active listening by giving them your full attention and limiting any distractions. In addition, ask them some follow-up questions to learn more about their expectations and goals.
12. Take your time
Take as much time as you can to reach an agreement you prefer. Rather than rushing into a negotiation, take some time to read through each document carefully. Before each meeting you have, review your notes again and develop any deliverables you plan to present. This can help you ensure that you address everything in the contract. Use the negotiation process to get everything in writing as proof of agreement, instead of relying on a verbal compromise.
13. Decide when to end negotiations
You may reach a point where you're not able to reach an agreement with the other party. Prior to choosing to end negotiations, ensure that you clearly understand the outcome of doing so. For example, when negotiating a job contract, understand the minimum salary you're willing to accept before considering another offer. This can help you ensure that you're agreeing to a fair deal before you sign the contract.
14. Ask for assistance
Try to determine whether there's a close colleague who can help you negotiate or consider someone who has previous experience negotiating. You could ask them to act as the other party and help you better formulate your arguments by providing you with beneficial feedback. This approach can help you learn how to appeal to the other party while still addressing your preferred conditions. With someone's help, you can also ensure that you consider each part of the contract.
Related: 16 Persuasion Techniques You Can Use
15. Hire a mediator
In certain situations, it may be useful to hire an outside professional to help negotiate your contract. A mediator provides guidance to two parties, allowing them to develop their own resolution. They can use their expertise to ensure you're reviewing all necessary terms in the contract and to assess its legal legitimacy. When hiring a mediator, search for someone who has experience with your particular type of contract negotiation.
16. Stay positive
Rather than negotiating an entire contract in one meeting or day, try to schedule individual meetings to focus on specific terms or sections. This can help you avoid overwhelming yourself and allow you to think more positively and retain information more easily. Express appreciation for the other party, even if there are terms you want to change. This can help you establish a positive rapport with them early on, which may help you in later negotiations.
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