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Most people think of negotiating
as the verbal give and take that takes people from their different wants
and needs to a point of agreement. That, of course, is the heart of
negotiating but just as important is the transition to the written
contract that formalizes the verbal agreement.
Here are the things that Power
Negotiators look for as they move toward the written contract:
Don't Let the Other Side Write
the Contract
In a typical negotiation, you verbally negotiate the details, then put
it into writing later for both parties to review and approve. I've yet
to run across a situation where we covered every detail in the verbal
negotiation. There are always points that we overlooked when we were
verbally negotiating that we must detail in writing. Then we have to get
the other side to approve or negotiate the points when we sit down to
sign the written agreement-that's when the side that writes the contract
has a tremendous advantage over the side that doesn't. Chances are that
the person writing the agreement will think of at least half-dozen
things that did not come up during the verbal negotiations. That person
can then write the clarification of that point to his or her advantage,
leaving the other side to negotiate a change in the agreement when asked
to sign it.
Don't let the other side write the contract because it puts you at a
disadvantage.
This applies to brief counter proposals just as much as it does to
agreements that are hundreds of pages long. For example, a real estate
agent may be presenting an offer to the sellers of an apartment
building. The seller agrees to the general terms of the offer, but wants
the price to be $5,000 higher. At that point either the listing agent
who represents the seller or the selling agent who represents the buyer
could pull a counter-proposal form out of his or her briefcase and write
out a brief counter-offer for the seller to sign. Then the selling agent
will present to the buyer for approval. It doesn't have to be
complicated: "Offer accepted except that price is to be
$598,000," will suffice.
If the listing agent writes the counter-offer, however, he or she might
think of some things that would benefit her seller. She might write,
"Offer accepted except that price to be $598,000. Additional $5,000
to be deposited in escrow upon acceptance. Counter-offer to be accepted
upon presentation and within 24 hours."
If the selling agent were to write the counter-offer, he might write,
"Offer accepted except that price is to be $598,000. Additional
$5,000 to be added to the note that the seller is carrying back."
These additions are probably not big enough to be challenged by either a
seller or a buyer who is eager to complete the transaction; however,
they substantially benefit the side who wrote the brief counter-offer.
If the person who writes a one-paragraph counter-offer can affect it so
much, think how much that person could affect a multi-page contract.
Remember that this may not just be a matter of taking advantage of the
other side. Both sides may genuinely think that they had reached
agreement on a point whereas their interpretations may be substantially
different when they write it out. A classic example of this is the Camp
David accord, signed by President Carter, President Anwar Sadat of
Egypt, and Prime Minister Menachem Begin of Israel.
After 13 frustrating days of
negotiating at Camp David where they all felt until the last moment that
their efforts were futile, they reached what they thought was a
breakthrough to agreement. Excitedly they flew helicopters to Washington
and with massive publicity signed the accord. In the East Room, the
normally unemotional Menachem Begin turned to his wife and said,
"Mama, we'll go down in the history books tonight." That may
be so, but the truth is that many years later, hardly any of the
elements of the agreement had gone into effect. Their enthusiasm led
each of them to think that they had reached agreement when they really
hadn't.
If you are to be the one writing the contract, it's a good idea to keep
notes throughout the negotiation and put a check mark in the margin
against any point that will be part of the final agreement.
This does two things:
1. It reminds you to include all the points that you wanted.
2. When you write the contract, you may be reluctant to include a point
in the agreement unless you can specifically recall the other side
agreeing to it. Your notes will give you the confidence to include it
even if you don't remember it clearly.
If you have been team negotiating, be sure to have all the other members
of your team review the contract before you present it to the other
side. You may have overlooked a point that you should have included or
you may have misinterpreted a point. It's common for the lead negotiator
to let her enthusiasm overwhelm her to a point that she feels that the
other side agreed to something when it was less than clear to more
independent observers.
I'm not a big believer in having attorneys conduct a negotiation for you
because so few of them are good negotiators. They tend to be
confrontational negotiators because they're used to threatening the
other side into submission, and they are seldom open to creative
solutions because their first obligation is to keep you out of trouble,
not make you money. Remember that in law school, they are not taught how
to make deals, only how to break deals. In our litigious society there
isn't much point in making an agreement that won't hold up in court,
however, so it's a good idea to have the agreement approved by your
attorney before you have it signed. In a complicated agreement what you
prepare and have the other side sign may be no more than a letter of
intent. Have the attorneys work on it later to make it a legal document.
It's better that you devote your energy to reaching agreement.
If you have prepared an agreement that you think the other side may be
reluctant to sign, you may be smart to include the expression
"Subject to your attorney's approval," to encourage them to
sign it.
Once the verbal negotiations are over, get a memorandum of agreement
signed as quickly as possible. The longer you give them before they see
it in writing, the greater the chances that they'll forget what they
agreed to and question what you've prepared.
Also, make sure they understand the agreement. Don't be tempted to have
them sign something when you know they're not clear on the implications.
If they don't understand and something goes wrong, they will always
blame you. They will never accept responsibility.
I find it helpful to write out the agreement I want before I go into the
negotiations. I don't show it to the other side, but I find it helpful
to compare it to the agreement that we eventually reach, so that I can
see how well I did. Sometimes it's easy to get excited because the other
side is making concessions that you didn't expect to get. Then your
enthusiasm carries you forward and you agree to what you feel is a
fantastic deal. It may be a good deal, but unless you have clearly
established your criteria up front, it may not be the deal that you
hoped to get.
Power Negotiators know that you should always try to be the one that
writes the contract. When the verbal negotiations are over, it's time
for someone to put everything in writing, and the person who gets to put
it in writing has definite power in the negotiations. There are bound to
be little details that you didn't think of when you were verbally
negotiating that need to be specified in the written contract.
If you're the one who gets to write the contract, you can write those to
your favor. Then it's up to the other person to negotiate them out when
it comes to signing the contract. So, try to be the one who writes the
contract.
I'll say to the other people, "Look, we need to put this down in
writing. But let's not go to a lot of expense on this. I have an
attorney on retainer, it won't cost either one of us anything for me to
have my attorney do it." Even if I had to pay the attorney to do
it, I still think I'd be better off to be the one who is writing the
contract.
Read the Contract Every Time
In this age of computer-generated contracts, it's a sad fact that you
have to reread a contract every time it comes across your desk.
In the old days, when contracts were typewritten, both sides would go
through it and write in any changes, and then each negotiator would
initial the change. You could glance through the contract and quickly
review any change that you had made or to which you had agreed. Nowadays
with computer generated contracts we're more likely to go back to the
computer, make the change, and print out a new contract.
Here's the danger. You may have refused to sign a clause in a contract.
The other side agrees to change it and says they'll send you a corrected
contract for your signature. When it comes across your desk, you're
busy, so you quickly review it to see that they made the change you
wanted and then turn to the back page and sign it. Unfortunately,
because you didn't take the time to reread the entire contract, you
didn't realize that they had also changed something else. Perhaps it was
something blatant such as changing "F.O.B. factory" to
"F.O.B. job site." Or it may be such a minor change in wording
that you don't discover it until years later when something goes wrong,
and you need the contract to enforce some action. By then, you may not
even remember what you agreed to, and you can only assume that because
you signed it you must have agreed to it.
Yes, I agree with you-you have a wonderful case for a lawsuit that the
other side defrauded you-but why expose yourself to that kind of
trouble? In this age of computer-generated contracts, you should read
the contract all the way through, every time it comes across your desk
for signature.
People Believe What They See In
Writing
The printed word has great power over people. Most people believe what
they see in writing, even if they won't believe it when they just hear
about it.
The Candid Camera people did a stunt to prove that a number of years ago
-- you may remember seeing it on television. They posted a sign on a
road next to a golf course in Delaware that said, "Delaware
Closed." Allen Fount stood by the sign in a rented trooper's
uniform. He wasn't allowed to speak to the people as they came up, only
point up at the sign.
What happened amazed me. People were coming to a screeching halt and
saying things like, "How long is it going to be closed for? My wife
and kids are inside."
People believe what they see in writing. That's why I'm such a big
believer in presentation binders. When you sit down with someone, you
open the presentation binder, and it says, "My company is the
greatest widget manufacturer in the world." Then you turn another
page and it says, "Our workers are the greatest craftsmen in the
business." You turn another page and start showing them reference
letters from all your previous jobs.
They find it believable even when they know you just came from the print
shop with it.
This is how hotels are able to get people to check out of the rooms on
time. Holiday Inns used to have a terrible time getting people to check
out of their rooms at 12 noon, until they learned the art of the printed
word and posted those little signs on the back of the door. Now 97
percent of the guests check out of their rooms on time, without any
question at all, because the written word is so believable.
Recognize this when you're negotiating with people. In our litigious
society, it's essential to eventually get your agreement into writing.
As regrettable as it may seen, it doesn't make much sense to verbally
negotiate an agreement unless the other side is willing to attest to it
in writing somewhere down the line. Power negotiators know that it's
important to wean the other side onto seeing in writing what they are
agreeing to verbally.
So every chance you get put things in writing. Take the time during the
verbal negotiations to say, "Let me be sure that I understand what
you're proposing." Then stop to write down your understanding of
the point that you were discussing. Show it to the other side, but you
don't have to have them sign it at this point. All you're doing is
getting them used to seeing it in writing. This subliminally confirms
what, up to that point, has only bee a verbal understanding. If you don
this at intervals during the discussion, you'll have much less trouble
getting them to sign the final written contract.
It's important to realize that, at every point of the negotiation, the
other side is more persuaded by what they see in writing. For example,
if you have salespeople selling for you and you have to put a price
change into effect, be sure that they have it in writing. Because
there's a world of difference between them sitting with a potential
customer and saying, "We're having a price increase at the start of
next month, so you should make a commitment now," and them saying,
"Look at this letter I just got from my boss. It indicates that
we're having a price increase on July 1st." Always show it to
people in writing whenever you can. If you're negotiating by telephone,
back up what you're saying by also faxing them the information.
If you sell big-ticket items and don't have a method of creating
computer-generated proposals, I'd suggest that you stop everything and
go get a computer system right now. It'll pay for itself on the first
job. Many years ago I was in Australia on a lecture tour and a fire
broke out on the second floor of my home in California. When I returned
I had three contractors bid on repairing the damage. Two of them
scrawled out bids by hand. They both bid around $24,000. The third
contractor prepared a very comprehensive bid by computer. Every little
detail was spelled out in detail. But his bid was $49,000-more than
twice as much. I accepted the higher bid because the Power of the
Printed Word was so great that I just didn't trust the hand-written
bids.
What's the bottom line? Because people don't question what they see in
writing, you should always present written backup evidence to support
your proposal. If the negotiation includes expectations that the other
side will meet certain requirements, it also helps to confirm those
requirements in writing.
The transition from a verbal
negotiation to a written contract can be a delicate one, but Power
Negotiators known how to set it up so that it doesn't become a traumatic
experience. |
