As a business owner in New Zealand, you will be dealing with various contracts that determine how your business operates. The most common type of contracts are commercial contracts. These are contracts relating to buying and selling goods or services. They can be consumer contracts or contracts between businesses. When two or more parties create a contract they generally negotiate the terms between them. This article will outline top tips for negotiating commercial contracts in New Zealand.
Know What You Want
Before you enter into a contractual negotiation, you must know what you want to get out of the contract. You should discuss with your business partner/s what your objectives are and what compromises you are willing to make. If you do not know what you want out of the negotiation, it is unlikely that you will complete a successful contract negotiation.
Understand the Contentious Issues
Another important tip when negotiating commercial contracts is to understand what the contentious issues are going to be. There are many terms that your contractual partner will agree upon, but a few terms will be the focus of your negotiation. Understand what these points are and figure out ways that you can work around them. Consider whether you can compromise or whether this point is non-negotiable.
Continue reading this article below the formDo Not Be Afraid To Take Multiple Negotiations
Most commercial contracts take more than one negotiation. This is why you must not be afraid to engage in multiple negotiation sessions if you think it will be beneficial. Multiple negotiation sessions help you hone into the finer points of a contract and make it less likely that there will be a dispute down the line.
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Get a Mediator
Businesses may often utilise a mediator to help with commercial negotiations. A mediator is an independent third party that helps facilitate discussion. The advantage of using a mediator is that they can help the conversation stay on track. This means the negotiation focuses on the most important issues. In addition, having a mediator means the contract is more likely to be negotiated faster and more efficiently. However, the downside of utilising a mediator is that it adds another cost for both parties.
Know When to Walk Away
Ensure you know when to walk away. Knowing when to walk away can be challenging to determine. However, making this judgement avoids wasting time and money negotiating a contract that will never come to fruition.
Make Sure Your Contract is Enforceable
A contract is only enforceable when it contains all the elements of a binding contract. The most contentious element is whether the parties intended for the contract to be binding. If either party does not intend for the contract to be enforceable, then the contract will not be binding. Another important element is to make sure that there is certainty in the terms of the contract. Accordingly, there should be no ambiguity in the meaning of the contract.
Remove Emotion
An important value to apply when entering commercial negotiation is to remove any emotion. So often, business owners become emotionally invested in a particular deal resulting in unfavourable contractual terms. One way to remove emotion is to engage an independent negotiator like a lawyer.
Key Takeaways
You must adopt the best possible strategies when negotiating commercial contracts so that you enter into a contract that most benefits you. One way to do this is to ensure you enter into contractual negotiations with a clear picture of what you want to achieve. You should also ensure that your contract is enforceable by ensuring that both parties intend the contract to be binding. Additionally, the terms should be certain and unambiguous. Finally, hiring a lawyer to negotiate on your behalf might also be a good idea, as it will help you remove emotion from any decision.
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Frequently Asked Questions
No, if you and your contracting party cannot agree, you can either walk away and try to negotiate another time.
No, most contract negotiations are via email. Usually, a contract will be offered, and the contracting party can amend any clauses they see fit. The original party will then have to accept this.
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