Negotiating for Success: Essential Strategies and Skills by George Siedel

Author:George Siedel
Language: eng
Format: mobi, pdf
Tags: Negotiating, Business & Economics
ISBN: 9780990367192
Publisher: Van Rye Publishing, LLC
Published: 2014-10-03T21:00:00+00:00

UNIT III

CLOSE YOUR NEGOTIATION WITH A BINDING

CONTRACT

8. Use Contract Law to Complete Your Negotiation 9. Move Beyond Legalities to Create Value

Chapter 8

Use Contract Law to Complete Your Negotiation

It is often stated that negotiation takes place in the shadow of the law. The law actually casts two shadows on negotiations. First, in a negotiation to resolve a dispute, the shadow is litigation—the ultimate BATNA in this type of negotiation. Chapter 3

explored how the litigation BATNA in the US differs from that in other countries. That chapter also explained how to calculate the value of your litigation BATNA using decision tree analysis.

The second shadow, which arises in deal-making negotiations, is the legal framework for contract negotiation and the elements necessary to convert your agreement into a binding contract. Although the focus of this chapter is on these elements, we first step back from legal details to discuss three broad perspectives on contract law and two key variables that determine the law that will apply to your contract.

PERSPECTIVES ON CONTRACT LAW

In essence, a contract is an agreement enforceable by law. We all enter into many agreements that are not legally enforceable. For example, you and I can strongly agree that a certain movie is the worst one we have ever seen but our agreement is not enforceable in court. Contract law provides a framework for determining which of our agreements are enforceable.

Three perspectives are useful when thinking about contract law. First, there is a global perspective. In the global world of business, the rule of law is critically important when making business decisions. No legal rules are more important than contract law because contracts establish your rights and duties in business deals. Your first question when making investments in any country should be: Will my contract rights be respected and enforced in this country?

Second, from a company perspective, contracts are the key to business success. All other company activities—accounting, marketing, finance, strategy, etc.—are for naught if

your contracts are not profitable. Within companies, value is created during contract negotiations and companies fail when these negotiations do not produce successful results.

Third, from a personal perspective, contracts (both written and unwritten) permeate our daily lives. Whether these contracts involve the simple purchase of a meal or more complex transactions such as buying a house, they represent an important aspect of our interactions with other humans.

Because contracts are so common in our business and personal lives, in most cases we must act as our own lawyers when negotiating them. In other words, we cannot have a lawyer at our elbow throughout the day to advise us whenever we enter into a business or personal contract. As a result, we need a fundamental understanding of the sources of contract law and the four key elements that determine whether a contract has been formed. We now turn to these topics.

UNDERSTAND THE SOURCES OF CONTRACT LAW

When you are involved in a negotiation and a contract law question arises, where can you (or an attorney) find the answer? Two key questions determine the source of contract law.

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