Contract Negotiations for Beginners

Inking The Deal.  

You are a budding professional in your industry and more interest has piqued for your expertise. This is a great sign that you have turned your knowledge into a profitable business. But don't count on word of mouth or a friendly handshake as a guarantee to be paid. On the other hand, you will have to pay for some services as a leader. Since you are not the procurement or legal guru in either case, you must know the basics of negotiating deals.  Even the smallest business deal should involve a basic contract when monies are exchanged with a few clarifications.

Since there is no reason to pay dearly for ignorance, here are a few clauses that must be in your contract for your benefit:

1). Duration - Regardless if you are providing or paying for a service or a product, be clear about the cost for the specified timeframe. A new contract or cost should begin at the end of the allotted duration.

2). Compensation - Be succinct and straightforward about expected compensation, upfront fees, and anticipated payment schedules.   If the company or person is not well-known or past experiences have been shaky, establish payment schedules that minimize financial losses.  For instance if monies are due net 45 days and a payment is missed, you are stuck with 90 days of non-payment and employees and bills that still have to be paid. 

3). Rights - If you are creating a product that can be used for multiple clients, be sure you don't give up your right to license it or use it elsewhere. These are some sneaky clauses because they tend to try to include works completed prior to being brought aboard. 

4). Termination - Always have an out for both parties.  Protect yourself if the situation does not work well with a timeframe of which written notice must be given. This clause must also clearly state that services rendered or products provided up until the end of the relationship should be be paid in full. 

5). Arbitration - No one wants legal fees unnecessarily.  It would be a shame if there were issues that could not be resolved.  It is to all parties' benefit to agree to arbitration because it is less costly and can prevent time spent on lawsuits. It also usually leaves both parties winning in the end.

6). Expectations - This is a relationship and both parties should be on the same page. Make it clear what will be provided and stick to this. Anything outside of this should require an amendment or another contract.

Of course, I would always advise getting a lawyer to review all contracts but some things you should check on your own.  The handshake or oral agreement does not hold up in any court of law.  It is better to prevent losses rather than try to recover from them.

Be sure to like on Facebook:  http://facebook.com/execgetaclue or follow tweets at http://twitter.com/temekoruns

Posted in: Entrepreneurship,Get A Clue,Leaders,Leadership Skills,management consulting,negotiation skills,project management,teamwork