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15 Tips for Negotiating a Contract

February 22, 2021

There are times throughout your career when you need to negotiate a contract. Whether you are discussing the terms of a job offer or client agreement, it's important that you have strategies to leverage your position. The goal of contract negotiation is to find a compromise multiple parties can agree to. In this article, we define contract negotiation and share 15 tips to use when negotiating a contract.

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What is contract negotiation?

Contract negotiation is the process of discussing the terms of a written agreement. This conversation typically happens between two parties. During this meeting, they will discuss different aspects of the contact and eventually come to an agreement. When negotiating for yourself, the goal is the leverage the advantages you have. The purpose of negotiation is to settle for the best terms both parties are willing to agree to.

Related: Contract to Hire: Definition, Pros and Cons

15 tips for negotiating a contract

Follow these tips when negotiating a contract:

Know your priorities

Start your discussion by outlining your priorities. Let the other party share what is important to them as well. You may find that you both have similar goals and values, making this entire process much easier. Even if your ideas differ quite a bit, knowing each other's priorities can help you both come to a fair agreement. Rank your priorities in order of importance.

Prepare alternatives

Underneath your priorities, prepare alternative options that you might settle for. Only mention these if the other party is challenging what you have already presented. Wait until the right moment to mention alternatives in order to keep your stance.

Know your wants vs. your needs

Figure out what you need from a contract and what would simply be a nice additional perk. By being forthright about your needs, the other party can realize that they are non-negotiable. Make it clear that you absolutely need these things when working together. For instance, if your team needs specific resources, share that you can only complete your work if the other party provides them. Knowing your needs can help with the planning process and help you determine important factors, like budgets, timelines and resources.

Related: 10 Tips to Negotiate Your Salary (With Examples)

Decide when to quit

You may reach a point when you find that you simply cannot reach an agreement. Prior to going into this meeting, make sure you have a clear understanding of your bottom line. For example, when negotiating a job contract, get to know your absolute minimum dollar amount. Rather than agreeing to a lower payment, tell yourself this is the lowest number you can accept. This can help you leverage higher compensation and ensure you are only agreeing to a fair deal.

Consider time constraints

When negotiating the terms of a contract, consider how long everything will 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 they will pay you a flat rate or on an hourly basis. Consider what will happen in the project takes longer than you anticipate. Also, consider the timeline of your contract, clearly outlining any milestones or deadlines you need to reach.

Discuss risks and liabilities

Always 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. A good example is who is liable in the case of an emergency. Likewise, you should know what will happen if one party is not able to fulfill their promises.

Related: How to Negotiate at Every Stage of Your Career

Hire a mediator

In certain situations, it may be best to hire an outside professional to help you negotiate your contract. They can use their expertise to ensure you are discussing everything you need to cover. Since they do this kind of work all the time, they may know what a legitimate contract should look like. When hiring a mediator, look for someone who has experience with the particular kind of negotiation you're working with.

Imagine their perspective

Although you may want the contract to work out in your favor, you need to also consider the perspective of the other party. Try to come to a fair agreement that is mutually beneficial. This may require some compromise but may be worth it once you get your contract settled. By trying to understand the other party's thought process, you might be able to come up with realistic solutions that allow you to both feel content about the terms of the contract.

Related: Negotiation Skills: Definition and Examples

Discuss clauses

Consider non-compete, dispute resolution, confidentiality and changes in requirements. These more complicated matters may require you to hire a professional. When considering clauses, think about anything that may come up while working together.

Choose where to negotiate

Where you decide to negotiate will all depend on what kind of contract you're discussing. For instance, with a simple contract, you may be able to come to an agreement over email. Even a phone call or video call may suffice. More serious matters may require you to meet in person. If you are meeting multiple times, make sure you record everything you discussed. This way you can pick up right where you left off the next time you meet.

Learn the background of the other party

Learn as much as you can about the other party. This information can help you understand the perspective of the other party. Likewise, it can give you some information to leverage. Background research can let you go into a deal knowing what to expect.

Take your time

Take as much time as you can to come to an agreement you prefer. Rather than rushing into something, thoroughly read through every single document. You want to ensure that you are covering everything you might need. Use this process to get everything in writing, instead of verbally agreeing to it later on. This way, you and the other party have proof of any agreements you have made.

Take notes

Have someone, such as an assistant or secretary, take notes for you during your meaning. This can help you remember your talking points and what you may need to address the next time you meet. After the meeting, take the time to type up these notes and file them away.

Be reasonable

Remain polite and professional throughout the course of your negotiation. Practice active listening, which means you give the other party your full, undivided attention. Ask follow-up questions to learn more about their expectations.

Get help from backup

See if there is anyone at your company who can help you negotiate. This way, one of you can be more firm while the other can be more open to discussion. This approach is a great way to appeal to their other person while still keeping your stance. By having someone help you, you can also ensure you are considering every part of the contract. Pick someone who has prior experience negotiating, preferably someone who tends to be persuasive.


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