Over the years, I’ve provided some powerful negotiating techniques, but I’ve never yet written about negotiating techniques that can either scuttle a business deal or even ruin a business relationship.
Measured by its destructive power, the worst negotiating tactic is actually quite common: using a contract to negotiate significant issues rather than negotiating them personally. This usually happens when the party drafting or editing the contract:
- Thinks of something that they forgot to negotiate.
- Doesn’t want to negotiate an issue because it’s hard to negotiate.
- Is afraid that the issue, if made explicit, will break the deal.
Rather than surfacing and negotiating the issue, the person drafting or editing the contract changes the contract in the hope the other party won’t notice or, if they do notice, will sign the contract anyway. This is a dangerous tactic because:
1. The other party might notice before signing the contract.
In this case, the person who drafted or edited the contract either:
- Looks foolish for not realizing that the contract issue was important
- Comes off a little like a grifter trying to pull a fast one,
- Leaves the impression–rightly or wrongly–that they have such small respect the other party that they’re just saying “take it or leave it.”
Whatever the case, the relationship is now damaged and the deal might not go through.
At the very least, there will need to be additional negotiation, which will now be conducted under a cloud of mistrust–not the best atmosphere in which to come up a win-win situation. And even after the issue is negotiated, there may be residual resentment.
As with any relationship, if the relationship in question has a long positive history, it will probably weather the situation. But it’s putting needless stress on the relationship, which is seldom a smart business move.
2. The other party might not notice and sign the contract anyway.
In this case, the other party has signed something that doesn’t reflect their understanding of the deal that was negotiated. The other party will thus go forward under that misconception until the discrepancy surfaces, at which point there’s going to be an argument like this:
- Party A: “What gives? This wasn’t our arrangement?”
- Party B: “It’s in the contract you signed.”
- Party A: “What? I didn’t sign up for that!”
- Party B: “Check your contract.”
- Party A: [checks] “I can see it in the contract, but that wasn’t the deal.”
- Party B: “Not my problem. You should have read the contract.”
That whooshing noise you just heard was your business relationship going down the drain. You may still end up working together under the contract but it will be a draining experience for everybody involved.
Here’s the thing: the purpose a contract–any contract–is to define the deal so that there are no misunderstandings. As such, it must reflect as closely as possible the deal that was negotiated.
If there are significant issues that come up during the drafting of the contract, they should be surfaced, ideally prior to sending the contract, but at the very least by highlighting in the contract. The issue can then be negotiated before the contract is actually signed.
That way there are misunderstanding and no surprises.