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Entering into a contract negotiation can be a frightening task. After all, the way you act in negotiation may determine how well your business does. If you run or own a business, you will be used to entering into contracts. They are a vital part of any commercial relationship as they are legally binding. This means that both parties must follow what they agreed to in the contract, or they could be held liable for a contractual breach. One of the ways that you can ensure that your negotiation goes well is to have a contract playbook. This article will explain what a contract playbook is and what it should contain.

Contract Playbook

A contract playbook is a document that lists what a business or entity is looking to achieve when negotiating a contract. It allows the negotiators to have a picture of the business’ priorities and clear guidance for the terms they need to include in the contract. They are an important part of any contract negotiation as they allow a business to save time and money on issues that are not important to them. 

Benefits of a Contract Playbook

Categorises Issues

One of the benefits of a contract playbook is that it categorises the issues a business wants to contract on. This makes it more effective when negotiating a contract. It is especially the case when you are negotiating multiple contracts with multiple different parties. 

Easy for New Staff

Another benefit of a contract playbook is that it becomes easier for new staff to understand the matters that their business wants to contract on. Accordingly, the business can let these new staff negotiate contracts on their behalf without them having to know the business extremely well.

Saves Time

A contract playbook also means that you can undertake a contract negotiation much more quickly. This is especially the case if both parties have a contract playbook. Consequently, each party can lay out what they are hoping to achieve from the contract, and negotiators can find a compromise that suits both parties. 

What Should a Contract Playbook Contain?

Contract Type

Firstly, your contract playbook should cover what type of contract you are looking to enter. There are many different types of contracts, and you may be willing to enter into more than one type of contract. Therefore, it is essential that your contract playbook clearly states your objective and why the particular type of contract is best for your agreement.

Contractual Clauses

You should also consider the types of clauses you want to include in your contract. For example, you may want to include a termination clause that allows you to cancel the contract in certain circumstances.

Negotiation Approach

Another useful clause to include in your contract playbook is to advise your negotiator what negotiation approach they should employ. There are three key types of negotiation approaches, as seen in the table below.

Negotiation Approach Description
Positional Positional negotiation is a scenario where both parties refuse to compromise and will only try and negotiate on what is best for their business. This is an adversarial negotiation style. Likewise, a party with a significant power advantage over the other will usually employ this technique.
Interest-Based Interest-based negotiation requires both parties to find a middle ground on which they can make an agreement. In this negotiation style, both parties want what is best for themselves but are willing to compromise to complete a deal. 
Mixed As the name suggests, mixed negotiation is a mix of positional and interest-based negotiation. The parties may be willing to compromise but ultimately want a solution that is beneficial for their business. 

Key Takeaways

Negotiating a contract is an essential step in contract formation. Ultimately, the way you negotiate will determine the benefits you receive from the contract. Contracts can last many years, so it is vital that you aim for what is best for your business. Having a contract playbook can help you achieve this. A contract playbook is a guide to your contract negotiation. It will contain what your business is trying to achieve from the contract and what types of clauses it should contain. It should also contain the style of negotiation you are looking to use. The main benefit of a contract playbook is that it makes it easier for your negotiators to determine what you want out of a contract, regardless of whether they know your business or not. 

For any legal assistance with negotiating or drafting your business contracts, contact LegalVision’s contract lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Are contract playbooks mandatory?

No, the law does not require parties to use a contract playbook. However, they are a valuable tool to have when negotiating contracts. 

Which type of contract negotiation is the best?

Each type of contract negotiation has its benefits and drawbacks, and the type of negotiation you use will depend on the situation. However, mixed negotiation is the most common form of negotiation.

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