Vendor management: How to negotiate contracts

23.12.2008

It seems so unfair. Moreover, fairness not significance should be your primary focus in a negotiation.

In , you must avoid that very natural tendency to see the deals starting point as being the vendor's form. You should first see the deal from your one-sided perspective. What do you want and need?

In a negotiation, you're not likely to get everything you want, but you must work to pull contracts back to the middle, i.e., back to what is fair. You should not ask for changes in a vendor's form except after asking yourself whether the change is significant. If it is significant and one sided in favor of the vendor, ask that the provision be made neutral.

Some one sided clauses should be moved towards benefiting both parties. For example, if the vendor asks that you indemnify them for your wrongdoing, you should ask that they indemnify you for their wrongdoing. If they get attorney's fees if they're the prevailing party, then you should if you're the prevailing party. If they can terminate the agreement if you sell your company, the reverse should be true.

After you have put every unfair provision on the table, you can use the issue of significance to decide which points to give up. Certainly, not every point has equal importance to you.