IE Business Daily Business news for the Inland Empire.
By John Tulac
- Always negotiate from a written planned agenda. Sure, you know your business better than anyone else. Sure, I’ve seen people who know their business so well they can make great deals on the spot with little or no specific preparation. However, most of us do a better job when we plan and prepare in advance. Make a list. Check it twice. A good outline will help you make sure you don’t miss anything important.
- Ask a lot of questions. Anybody can make a great contract by asking the same questions any good reporter would ask: Who? What? Why? When? How? Who are the parties? Who does what under the contract? What is the “What,”the subject matter of the contract, including the payment and payment terms? What happens if? Keep asking this until you have all the conditions, contingencies, cures, and remedies identified and allocated. “Why” addresses the purpose of the contract, which may help set up a specific remedy in case of a problem. When is each element of performance required? “When” also sets the order of performance. How is each aspect of performance to be done? “How” also addresses quality and quality control. I do a whole seminar on asking questions to make great contracts.
- Write the first draft of the contract yourself. Once you have made your deal, write down all the essential points, either as you are negotiating them or immediately thereafter. It doesn’t have to be anything fancy. It just needs to be complete. This is more powerful than you might think. If you and your counterpart date and sign it, you have a binding and enforceable agreement. When you give your draft to your lawyer, you make it much easier to draft a final contract; saving legal time saves you money (yes, a lawyer wrote this advice!). Also, insist that your lawyer follow your exact language as much as possible. When people see their own words in a contract instead of legalese, they tend to do what they promised.
- Write in simple declarative sentences. Make sure your lawyer writes in direct, short sentences. Long compound sentences and legal jargon can cause misunderstanding.
- Meet or exceed the requirements of the contract. Get the job done well before the deadline. Or add a little something and don’t charge for it. Make even the most routine performance memorable in some way and the counterparty will come back for more, and, better yet, will sing your praises to other. Your performance is the best way to make sure you keep making great contracts, because your great performance will lead to more opportunities.
- Ask for the next opportunity as you near completion or right after you complete the contract. Share information about other things your company does. Never assume your counterparty knows everything you do, no matter how long you have been doing business together. Inform one another. Serendipity is wonderful.
You might be thinking, “Why six tips?” Because seven and ten-tip lists have become a cliché. Thanks, Steve Covey!
John W. Tulac is an international business attorney practicing in Claremont, adjunct professor of law at University of La Verne College of Law, and Lecturer Emeritus (retired) at Cal Poly Pomona. He is peer recognized as preeminent in international business law and holds the highest ratings for competence and ethics from the Martindale Hubbell National Law Directory. He can be reached at (909) 445-1100.
