Contract Negotiation

When parties are anxious to make a deal, they may not take the time to negotiate a contract because they do not want to hold up the process or worry about losing the deal. In some instances, parties may not realize they have the right to negotiate the provisions of an agreement. However, before signing an agreement, it is important to consider whether you can make it more favorable to your interests.

You can obtain more beneficial terms through negotiation. During a negotiation, you and the other party discuss what you each want and try to find a compromise. You should not be afraid to negotiate particularly if the other side is also eager to move forward with a deal, so you have some leverage. Best practice is to get a lawyer involved early in the process to capitalize on a party’s willingness to come to an agreement. Even where you cannot get exactly what you want, the negotiation process will help you better understand the meaning and consequences of every provision so you can weigh the benefits and risks.

Contracts can be very lengthy and complex, especially when the “legalese” is added in. The best place to start documenting an agreement is with a term sheet or outline of the key terms to be included in the contract. From there, you can begin to break down each main point into smaller ones. This will make it easier to come to terms because the smaller points represent issues that may be negotiated separately. Agreeing on all the main terms with the other party before consulting a lawyer is generally preferable and can save a lot of time (and legal fees) later.

Before you start negotiating, you must have a clear understanding of your key objectives. What do you want to achieve in this arrangement? You should assess the benefits and risks of the contract as well as the relationship with the other party. How much do you want to work together and why?

In addition, prioritize your goals. What must you get, at a minimum, to make the deal worthwhile? What are your must-haves or deal-breakers? You should discuss these with your attorney as well as rank the importance of other terms to facilitate negotiation.

You must also be prepared to defend your positions. Find data and other information that supports your argument for compromise. You should also research the circumstances of the other party to understand their interests and concerns.

In negotiations, it is important to keep discussions business-like. Emotional appeals should be avoided. Also, go into the process with a win-win mindset. If you are solely focused on your “wins” rather than compromise, you are unlikely to come to an agreement.

Remember to take your time, ask questions and discuss the impact of your choices with your attorney to minimize the risks of a bad decision.

An attorney can help you negotiate favorable terms by explaining how the contract’s terms can affect your personal, legal and business interests. This will enable you to make well-informed decisions about when and how to compromise.

Many parties assume that a contract is fair or is “standard” in the industry. There may, however, be a wide range regarding what is considered fair or standard, leaving room for negotiation. In some cases, there may be provisions that can impose significant liability or allocate risks disproportionately to one side. An attorney can advise regarding business and industry practices and how to mitigate liability in the contract.

Finally, a lawyer can gather facts that support your contract position and use them effectively to advocate on your behalf. Your attorney is there to represent your best interests.

Once a contract is signed, changing its terms often requires the agreement of all parties. Negotiating before execution provides the opportunity to clarify obligations, allocate risk, strengthen legal protections, and address unfavorable provisions before they become legally binding.

While every agreement is different, parties frequently negotiate payment terms, indemnification provisions, limitation of liability clauses, intellectual property ownership, confidentiality obligations, termination rights, dispute resolution procedures, and renewal or extension provisions. Careful negotiation of these terms can significantly reduce future legal and financial risks.

Yes. Most contract negotiations occur entirely outside of litigation. An attorney works directly with the other party or their counsel to revise contract language, resolve disagreements, and reach mutually acceptable terms. Effective negotiations often prevent disputes from developing into costly lawsuits.

Even when a contract is presented as “standard” or “non-negotiable,” many provisions can still be modified. If the other party declines requested changes, an attorney can assess the legal and business risks, recommend alternative solutions, or advise whether accepting the agreement is in your best interest.

The earlier, the better. An attorney can identify potential issues before negotiations begin, suggest revisions that align with your business objectives, and help avoid costly mistakes. Early legal involvement often results in stronger agreements and reduces the likelihood of future contract disputes.