You're in a contract negotiation. How can you secure essential clauses without hindering the overall process?
Are you navigating the tightrope of contract negotiations? Share your strategies for including key terms smoothly.
You're in a contract negotiation. How can you secure essential clauses without hindering the overall process?
Are you navigating the tightrope of contract negotiations? Share your strategies for including key terms smoothly.
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Souvik's Mantra : 1. Identify and secure essential clauses: prioritize payment terms, Security Deposit Bank Guarantee (SDBG), Liquidated Damages (LD) clause, contract validity, and completion period. 2. Ensure these core clauses are explicitly outlined in the RFP/TEP/Tender to avoid ambiguity. 3. Avoid deviating from these primary clauses during negotiations; doing so could compromise project execution. 4. For non-core areas, remain flexible: discuss technical or commercial deviations as needed, aside from price adjustments. 5. Leverage a BATNA to strengthen your position without altering key terms. 6. By upholding these foundational clauses, you safeguard the project’s future success and avoid potential disruptions.
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Prefer to look for proactive approach, i.e. include key essential clauses from beginning (either part of tendering/RFP or sharing draft contract with essential clause) for them to evaluate the risk, opportunities prior making proposal. However, if this is not the case, then good intention, win-win approach by both parties, flexibility, finding an alternatives solutions if possible without taking major risk, better clarity in terms of wording, without much jargon, make it more simple with clarity shall work to address the situation. Better to have a meeting with stakeholders and conclude it during the meeting itself.
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Start by identifying the most crucial clauses—these are non-negotiable. Once you know what’s essential, focus on getting those points across early in the negotiation. Be clear and direct, so there’s no confusion. But don’t push too hard. Stay open to hearing the other party’s needs. If you can show flexibility in less critical areas, they’re more likely to agree on the important ones. Keep the conversation flowing and collaborative. The goal is to build a win-win agreement where everyone feels satisfied, not to bulldoze the process. Securing key clauses while keeping the bigger picture in mind will ensure a smoother negotiation.
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The essential clauses must take priority in negotiations - if it’s a show stopper that must be called out and each party must take that at face value and be open to negotiate and look for solutions.
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This is a great question and without going into too much negotiation acronyms I would say whenever in this situation you must know your BATNA and ZOPA, way before going to the round table. Best Alternative To Negotiated Agreement (BATNA) and Zone of Possible Agreement (ZOPA). These are Terms of the contract that you can at bare minimum, agree to and still come out win-win. It isn’t everything that you wanted out of the contract but the contract remains beneficial. If a contact doesn’t have any benefits walk away from the deal.
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Essentials of the contract are either a deal-breaker if not satisfied, or they are not that essential. Contractual negotiations always come to the point when either you agree to give up in some of the conditions, or you risk losing the contract. It is only the matter of experience and intuition when to be flexible.
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Make your priorities clear from the beginning and be transparent about non-negotiables. Share draft clauses as soon as in principle agreement is reached.
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First, be collaborative in your approach. Seek what you need while earnestly trying to solve the other side’s issues. By doing that you establish trust. With the established trust, make your hard lines known clearly and firmly without deviation or hesitation.
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Contract negotiation requires experience. Begin with grouping of clauses that are absolutely needed and those that you are flexible with. When negotiating crucial clauses be ready to cite international and local best practices and any compliances to law etc to strengthen your case. It is important to have a open mind to listen to other party on any of their constraints and giving due considerations to it. Any remaining clauses not considered by other party, see if any amendments to it would make other party accept it. Ultimately anything remaining and not acceptable to other party would let you see the risks associated with it if foregone or whether the contract is crucial for you over and above having that clause.
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In negotiation of clause/s it 1st depends on which party is negotiating and the reason of negotiation..is it disagreement of clause or the party wants to negotiate terms for which the contract was drafted. It cannot be the terms as after discussing the terms, contract was drafted. It could be language or ambiguity of the clause which can be rectified or words changed with unambiguous words. It is very good of keeping the contract going without hindrance
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