Continued from Negotiating Power – The Often Neglected Contract Position.
In most cases, the party with the greater bargaining power presents a draft contract to the other and asks them to sign it as is. The draft will set forth the major contract terms already discussed by the parties such as price, delivery method, term of a lease, etc. The remaining terms tend to favor the party who prepared the contract. If you are an entrepreneur looking to capitalize on a new shopping center for your small café, you will have a harder time convincing the landlord to agree to changes in a commercial lease than a national chain that will anchor the center.
Understanding your bargaining position prepares you for the negotiation process whether or not you are working with an attorney. If you really want to open your café in the new shopping center, you will want to tread carefully during negotiations. First, understand your rights and obligations as set forth in the proposed contract. If you are negotiating without the benefit of legal counsel, consider asking a San Diego contract attorney to at least explain these rights and obligations. Next, consider those terms you would like to change and prioritize. What are the most important changes? Remember, less bargaining power is not zero bargaining power. By focusing your negotiations on only the most important issues, you preserve leverage. Direct your discussions to the success of the transaction. If we change Term X, it will improve both our volumes. If you keep Term Y in the lease, I will lose significant business. Stressing the success of the transaction shows that you are focused and professional, and the other side has little choice but to accept it as a valid concern. Avoid the temptation to play “hard ball” with a party holding all the cards. Finally, where possible increase you bargaining power by giving yourself alternatives. No deal should be so important that you are willing to agree to terms destructive to the end goal. If you are convinced there are no reasonable alternatives, make sure the other side doesn’t know the extent of your desire.
There are of course a myriad of negotiation schemes (too many to address in this short article). Whatever the scheme, understand and accept your bargaining position and ensure that your attorney does as well.