Let’s go back to trade basics. Contracts — the basis of almost all commercial transactions. They are the most crucial documents to exchange hands in the legal sphere. They are helpful in multiple ways like outlining a deal, setting terms of conditions to be adhered to and declaring the rights and obligations of the respective parties involved.
Any transaction is incomplete without the presence of a bound contract, whether it is for employment, protection against loan defaults, marital problems, tenancy rights or to be bound by trade and commerce.
Since contracts form such an intrinsic part of our lives, it is necessary to understand the intricacies while negotiating them. One of the most common issues that have cropped up in the corporate industry in modern times is clumsy negotiation and poorly drafted agreements that unnecessarily end up inside courtrooms.
Here are some of the most practical and effective negotiation methods taken from the Karrass handbook so that you can apply to any deal:
5 Ways To Negotiate The Terms Of a Transaction
1. Do not give in first
As per the situation, it can be good for you to commit first and mull over what your client has in mind in certain deals. For example, an instance where a person wants to control a part of the negotiation and wants to have the first say in it. But in other circumstances, this could be easily suicidal.
When you’re a part of a complex deal and neither parties have a higher standing, it is dicey to commit and disclose what you have in mind. This is because it can raise expectations for the opposite party, giving them a scope to argue. Hence, it is advisable to know what your opponent’s strong point is and commit only then.
2. Use the buyer trick
In the case of a buyer, it is a thumb rule to lead the conversation to a point where the other party works out a counter-offer, even during the first one.
If you make someone wait, they will be more appreciative of your deal, than the other way round. If you give in first, then the other party might psychologically have the upper hand.
3. Avoid concessions
When you enter into a sale, purchase, or any commercial contract, leave space and ample room for when you open the discussion, and then narrow down your offer steadily as you move towards finalizing the agreement.
To put it simply, the opening offer must be higher than expected. Preferably, steer clear from any form of concession. Always lead the tone of the negotiation that ends with a higher level of satisfaction for the person who’s on the other side of the table.
4. Be unobtrusive
Not everyone provides the other party with key information and details of the transaction. Sometimes, we like keeping things in the dark.
It can also be the case where their expertise may not entirely be what they mean. Half disclosures are sneaky tactics used to get the higher end of the bargain.
Unethical sellers are on the rise, and one should be mindful about the genuineness of the products or consignments delivered as it may sometimes not be what you decided to settle for.
To protect yourself against such menaces, make sure that you have liabilities set out in the contract.
5. Have a back-up
Though negotiations are one of the most sought-after means of entering into a transaction of any nature, there may be the possibility of your strategy tanking. A good negotiator does not enter into a negotiation with the absolute optimism of it working out.
If you go into a negotiation overconfident about your potential success, then it could affect your judgment too. This spiraling effect can be dangerous as it lowers your morale and can affect the way you see and deal with negotiations the next time.
The best negotiation lessons are learnt through real-life negotiations. Sometimes, you could be in the midst of a friendly transaction with someone you know and realize that they have been strategically playing you.
To avoid being at the loser’s end, apply each tactic as much as possible to find out your success rate. So bargaining with your local vendor or landing a deal for your business, where are you going to begin?
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Author: Suzanne Elly