How to Negotiate a Contract

It is important to know how to negotiate a contract to protect oursleves professionally and personally as contracts are a part of life. We expect them in business but they also proliferate thoughout our personal lives. Contracts can be verbal agreements as well as written documents.

They range from marriage contract to agreements with those who work around our homes. To learn more about how to negotiate a contract consider the following.


Understanding What a Contract Is
A contract can be struck between two people verbally or in writing. two-men-negotiating-sm.jpgTo make a contract two people have to agree on two things - the service or commodity to be provided and the amount to be paid for that service or commodity. If you agree to pay your gardener $100.00 to take care of your lawn and he agrees, you have just entered into a contract. Breach of a contract can result in a lawsuit so each time you enter into an agreement it is wise to consider getting the precise terms in writing as memories can be very 'convenient'.

Establish your Objective
Before entering into any agreement clearly identify what it is you expect from the other person and what you are willing to pay. Consider what ancillary items or services should be addressed as part of the agreement. Make sure you understand your expectations as to who is to do the work or provide the item, when the work is to be done, when it is to be completed, and how payment is to be made and when.These items should be fairly clearly refined in your discussions before you start to establish the parameters of a contract.

Communicate Effectively
What one person says is usually heard slightly differently by the other. The best way to establish terms in a contract is to put each item in writing and have the other person edit what you have done. This way tests his or her understanding of what you think is the agreed upon term.

You may also want to ask a follow-up question to make sure there is clear understanding. Part of communicating effectively is to ensure that the other person has understood what you are saying. Disagreements arise from misunderstandings on the part of the two people. By communicating effectively you can reduce the risk of any misunderstanding.

What Comprises a Contract
To be a conract there must be an offer, an acceptance without condition and legal consideration, AKA payment, established. For the example above you offer to your gardener the task of taking care of your lawn, he accepts without reservation, and you both agree that the price to be paid for the service is $100.00. That is the essence of a contract. If he fertilizes your lawn and charges another $25.00 that is not covered within the contract and you are free to discuss the charge and even the service. If you disagree over the fertilizer you can reserve payment.

You can also cancel the contract but must pay for the work tendered to the termination notice date excluding the fertilizer. He also can terminate the agreement but must pursue payment for the fertilizer through other channels (small claims court). If the contract is in writing and ancillary services are covered, then the court will look to the contract. If it is a verbal contract the gardener may well say that it was implied that he could charge extra based on your verbal discussions. In such case the judge is likely to award a fair amount to the gardener for the fertilizer as the service was rendered in good faith.

Consider Using Experts
If the contract is more than the maximum small court claim you would we well advised to have any agreement put in writing and reviewed by an attorney. Lawsuits are worth avoiding and a good contract may help avoid a frivolous lawsuit as the losing party often must pay the other person's legal expenses.

Integrity, Demand It
A man's word is his bond, right? Well, maybe. Integrity is a convenience to some and obligation to others. But you can raise the level of integrity by demanding it. By this I mean you can establish the standard in a relationship by indicating how you intend to act and exuding the expectation that the other will do the same. A firm handshake, a direct look into the other person's eyes, and a personal commitment to keep up your end of the bargain encourages the other person to do the same.