Download Presentation Contract Negotiations Jan 2014

ALAYA
LEGAL
ADVOCATES
CONTRACT NEGOTIATION


C-17, II Floor, LSC I
Paschimi Marg
Vasant Vihar
New Delhi 110057
India
E: [email protected]
T: +91 11-41674458
January, 2014
Sakshi Bawa, Attorney
ALAYA LEGAL
ADVOCATES
PROPOSAL
WHAT IS A
CONTRACT
PROMISE
CONSIDERATION
AGREEMENT
LEGALLY ENFORCEABLE
CONTRACT
VOIDABLE
AGREEMENT
LEGALLY NOT ENFORCEABLE
VOID
AGREEMENT
ALAYA LEGAL
ADVOCATES
WHAT IS A
CONTRACT
Contd
• Section 2 (h) of Indian contract Act, 1872 defines an agreement :
“Every promise and every set of promises, forming the consideration
for each other, is an agreement.”
• Section 2 (h) of Indian contract Act, , 1872 defines a contract: “An
agreement enforceable by law is a contract.”
ALAYA LEGAL
ADVOCATES
CONTRACT
NEGOTIATION
“Negotiation often requires stepping into the shoes of the other."
Contract Negotiation:
Process of give and take between two or more parties to reach an
agreement.
The Business Side vs. the Legal Side of Negotiations
Contract negotiations have two distinct stages: negotiation of the
basic business terms followed by negotiation of the legal terms.
The legal terms are not divorced from the commercial or business
objectives. It is very important for the legal team to understand
such objectives so that the legal provisions are properly dove
tailed.
Points for specific attention;
- Potential liability of the parties and cap on such liability
- How future activities of parties may be affected by the contract
- Does the contract provide for change in law, adverse economic
situation and indicators for what may be construed as such
- Governing Law and Dispute Resolution
ALAYA LEGAL
ADVOCATES
CONTRACT
NEGOTIATION
Contd
Bargaining Position: The "Take It or Leave It" Situation
One key to the outcome of contract negotiation is the relative
bargaining positions of the parties. Standard or one sided
contracts may contain ‘unfair’ or ‘anti-competitive’ terms and
should be specifically examined in terms of the Competition Act,
2002.
ALAYA LEGAL
ADVOCATES
CONTRACT
NEGOTIATION
Contd
Components of Contract Negotiation
Key Inputs
Tools&&Techniques
Techniques
Tools



 Oral presentations
 Highly skilled contract
negotiators
 Legal Review
 Business Case Approval
 Contract Negotiation
Formation Process
o Plan negotiations
o Conduct
negotiations
o Document the
negotiation and
form the Contract



•

Solicitation
Bid or Proposal
Buyer’s source
selection process
Seller's past
performance
Previous contracts
Competitor Profile
Business Ethics/
Standards of Conduct
Guidelines
Market and Industry
practices
Tools &Outputs
Techniques
Desired
 Contract or Walk
away
Reference 6Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005)
ALAYA LEGAL
ADVOCATES
CONTRACT
NEGOTIATION
Contd
Three outcomes are possible when negotiating:
• Win-win (both parties win).
• Win-lose (one party wins, the other loses).
• Inefficient but equitable (all items shared equally).
ALAYA LEGAL
ADVOCATES
CONTRACT
NEGOTIATION
Contd
In conclusion;
i.
ii.
There is no golden rule of ‘Contract Negotiation’
It is important to be aware of the position of the counterpartystrengths and weaknesses
iii. Legal negotiations should be dove tailed with business
/commercial negotiations
iv. Sweet deals may end with bitter pills – thus, attempt for winwin positions
ALAYA LEGAL
ADVOCATES
In lighter vein