Contracts and negotiations are two important business basics. Before reaching an agreement, you will negotiate terms and conditions. Contract negotiations are a process wherein the two (or more) parties engage in a give and take until reaching an agreement.

During a typical contract negotiation, the parties will compromise on some of the issues to get what it really wants. While there are several details involved, contract negotiation, in general, comes down to two factors: risks and revenues.

Successful Negotiation

A successful contract negotiation is when both parties feel that the positives benefit both sides in all areas while the agreement is both fair and equitable. What’s more, once the parties have a signed contract that is beneficial for both sides then they have a firm foundation for building a long-term business relationship.


Attitude is everything. Having a positive attitude is likely the most important tool that you bring to the negotiating table. When you act like things are achievable then they will be achievable.

Similarly, remember to hold on to your personality and sense of humor throughout the negotiation. This is especially helpful if the going gets tough. Remember, keep the relationship positive, you will be working with many of these people when the contract is done.

Negotiation Basics

Note the contracts done quickly are usually lousy. Haste makes waste. While most people prefer not to do contract negotiating and would like to just get it over with, you still should not rush through it.

Contract Negotiations Objectives

The following objectives are used to evaluate the contract:

  • Explain all essential prerequisites, including the terms and conditions.
  • Make sure that all goods and services are thoroughly and unquestionably defined.
  • Have the compensation clear: this is total cost, what is the payment schedule, any financing or related terms.
  • Acknowledge all effective dates, possible and probable completion and termination dates, any renewal dates.
  • Make sure to identify potential risks and liabilities.
  • Set reasonable expectations with respect to the current relationship and for future interactions.

Professional Help

Different negotiations require different measures. Note that negotiating a vendor contract for a year of cleaning services in a small office is dramatically different than negotiating a multi-million or billion-dollar contract that calls for outsourcing a large call center. Therefore, if you are not comfortable reviewing contract language, it is a good idea to hire a lawyer that specializes in contract negotiation.

Because they are legally binding and may not go according to plan, you might need to negotiate very shrewdly. This means that you understand all the contract terms and that you have a plan in the event things do not work out.

Ranking Priorities and Looking for Alternatives

Prepare to negotiate one step at a time. You cannot properly negotiate the entire contract in one instance. Therefore, while you are developing your negotiation strategy, keep coming back to this to see if you need to add to the priorities list.

When strategizing, decide what you need from the other party and where you are flexible for compromise. Make sure that the important matters are discussed, negotiated, and agreed upon prior to moving to items you deem less important.

Moreover, a good strategy is to refer to items you deem less important so you would give them up so you get your high priority items. You can start by negotiating some of the easier issues first.

In general, negotiations focus on the bottom line and possible risks. Keep in mind that some risks and some revenue have more importance than others. This will help you focus on the goal of the negotiation while avoiding getting involved issues not so important to your position.

Frequently review the matters that have priority throughout the entire contract negotiation process and again at the end. Also, be sure to keep the discussion calm and orderly when meeting with the other party. You should prepare a topics checklist that will be checked during the negotiation.

If you need help with understanding contracts or need help in negotiating contracts, whether the negotiation is for a big or small deal, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.