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Script
Unit 2 Contract Negotiation
Pre-listening Activities
Business Contract Basics Important Points to Remember
When Putting Together a Contract
If you spend enough time dealing with customers, you will at some point have to deal with the contracts related to the service you provide to those customers.
At first, contracts can be intimidating, but like most things in life want to get a better practice, you will be better at dealing with these agreements. The following slides won't teach you to be a lawyer, but they will provide you some real world insights that will help you when it comes time to deal with the contract. You won't believe how many contracts I have seen come across my desk, but did not have the proper signatures. What I mean by the proper signatures is that the client who is getting the product or the service has signed the contract, and the person that is supplying that product or service has also sign the same contract.
You have to have both signatures on the same document in order for it to be a contract. A lot of smart contracts now have this wording below the signature line: authority to bind the company. This wording serves as a reminder to the person who was actually signing the contract that they must have the authority to commit to the terms of the contract that they were about to sign. Basically the client by signing it says, yes, “I can pay for this product or service that I'm about to receive”, and then subsequently the company representative is also saying, “Yes, I can deliver the product or the service as it’s outlined” in the contract. All contracts should have these basic elements:
Number one: A start date
When are you going to deliver the product or the service? Number two: Contract length
This can be any duration of time from a day, a week, a month, seven months or even four years.
Number three: Details of the product or service
This item can never have enough detail. The goal here is to make sure both parties know exactly what is to be done in the contract right down to the finest details. It is important to make sure everyone's expectations are absolutely crystal clear.
Number four: Prices
Yes, it is important to list out the price you are charging for the service for the part that you are selling. Making sure that contract details what is included is just as important as to what is not included in the price. When you think price, think number of units, value, frequency and any and all discounts, and for how long that price will be in effect you may want to offer discounts are increases in your price if certain conditions apply such as a customer who buys more than expected or less than agreed to. Keep these options open because you never know what will happen in the future.
Number five: Payment terms
In the old days when business was a local exchange of goods and services, payment terms are
paid much cash when you bought or received the product or service. As business became more international, it became inconvenient to pay cash, for say, shipload of iron ore, so payment terms became part of the contract. Payment terms and sure there is a timely balance between the delivery of the service to the payment for such service. Some companies can afford to extend payment terms for bigger deals but some need to be paid immediately. When you are negotiating payment terms, ensure you can afford to terms you agree to, otherwise you may find yourself overextended credit wise and not be able to afford to pay your employees or other key providers.
Number six: Mailing addresses.
In your contract make sure you have the mailing addresses of that person who signed the contract and the mailing address and name of the person or department you were to send the invoices to. Same applies if you're getting paid make sure your customer knows where to send the checked, either way you will save a lot of time in minimizing confusion, if you’re at this to the contract .
Number seven: Approved signatures.
Now we're going over this again but this is simple. Make sure the people who signed the contract have the authority to commit to the terms of the contract when in doubt, ask for proof. Don’t wrist disappointment or extra cost because you didn't do this step. When it comes to contracts and promises, the only valid promise is a promise that is written into the contract.
While-listening Activities Video One
Business Contract Basics: Important Points to Remember
When Putting Together a Contract
Everything else is simple words, unspoken words are not binding, which they were, but that is not the case. So the contractors say we will pick up and dispose of all access material, get it in writing, if the client says we will give you more business, and if you deliver on time, have them put that in writing. It is easy to believe or have faith in the other party when you're negotiating a contract. You want to take their word for everyone who has good intentions, but situations change, people change. To ensure everyone remembers what they promised by putting it in writing and incorporating it into the contract. It is natural that a contract will call back and forth between your company and your client, is each party fine tunes what they will agree to and what they want change or adjusted in the contract.
Electronically written contracts for document can be adjusted and or altered without the other party being told or being aware of it. Electronically written contracts or documents can be adjusted and or altered without the other party being told, or even being aware, you can get around redline in Word documents, like it or not, it's a fact. So you have to guard against this practice by reviewing the redline contracts that come back to you. Most people will concentrate their attention on the sections that have been redlined, but it is always good practices to scan the rest of a document to ensure nothing else has changed. One quick and easy way to do this is to first ensure that you have the same number of pages in the contract.
Secondly you can scan a contract by looking for the same words at the beginning and ends of each line, and comparing them to the original and the red-lined version. As you can see in this example the words any and against appear on the 3rd in eight lines as in the original, also we have
ballpoint A through D in both copies, she can be pretty sure that this section on the contract has not been altered. If that section had words added or removed and the words were not line up the same way, this would be RBS with gas pressure fun changes as well.
Every contract will have some changes made to it, when it does, both parties must agree to those changes. The changes need to be initiated by both parties or the change is not deemed accepted into the contract. This procedure also stops one party from making changes after the contract has been signed and ensures the integrity other contract process.
It is a good idea to actually write such a clause into your contract to ensure that both parties understand that all changes have to be mutually agreed to. One would think this is an obvious lie, but reality has taught me quite differently. Here is a scenario to consider. John works for a software company and John gets paid a commission for each of his software sales. John knows the full price of this company software, but John also knows he can sell more software if he discounts the price John might not really know what it cost actually right cell and support the software his company is selling. All he knows is he gets paid if he sells. So John’s motivations may not align with his company's objectives.
When it comes to discount some products or services, make sure everyone in your company knows what is the absolute lowest price that is acceptable, you run a business, not a charity. Don't give away the company's profits by adding excessive discounts into a contract. When you are negotiating a contract, always trying to keep in open mind new approaches and charms to a contract.
It is natural to immediately dismiss any changes to your contract, but try and listen to new approaches in new ways looking at the business. Sometimes these new ideas will come from your client, and your customers, your best reaction is not to react, but to listen and ask questions, lots and lots of questions Try to understand where they’re coming from, if you let the other person explain their position, their logic and their reasons why they are asking for what they are asking, you might see an opportunity or approach that you never thought it before, always respond this way, “oh, all that’s interesting”. “Why is that important to you and or your company?
The worst contracts are the ones done in a rush. It is well known that most concessions and contracts are done in the final hours at the negotiation. Do what you can to avoid hurried time or sensitive situations such as signing a bunch of contracts on the last day of the month or at the end of the quarter. Try to minimize the straps by not setting a deadline to sign by a certain day or a certain time. Of course you will have to eventually sign the contract, but you can now predict ahead of time what issues will come up in the negotiation phase. So don’t be at a disadvantage and leave yourself some extra time and flexibility. Contracts can impact businesses in many ways, unless you on run and manage a one-person business. Chances are very high that the contract you're about to sign will affect a lot of people in your company. People may be hired, expensive machinery purchased, office space is rented, and budgets changed, and so on.
So now is the time to hand over your about-to-be signed contract to a trusted party in your company, or organization for them to have a review of the deal.
They may have a perspective of our knowledge about a certain situation do you were not aware of. This information may have a material impact on the deal or simply point out something that might become an irritant later on. The point is that you won’t (unless you get a second or a third opinion also). This gives other folks in the organization the ability to know and manage to the contract terms and that alone will ensure for successful contract.