Speedrunning Contract Negotiations

Nowadays it’s fairly easy for anyone to get hold of a contract template and modify it for their own use, and then send it to the other side for their comments, and parties may eventually reach a consensus as they narrow the issues. What I dislike about this approach is that incrementally trying to reach middle ground is terribly inefficient compared to asking more direct questions.

1. What do you want to get from this contract?

It sounds like an absolute no brainer, but many parties tend to assume what the other party wants based on the initial form or title of the draft. (In National Service, I was constantly reminded that to assume was to “make an ass out of u and me“, and it occasionally holds true in the civilian world!)

Focusing on objectives rather than categories or labels saves a lot of time by helping parties realise quickly if there are irreconciliable differences, and we can walk away before sunk cost fallacy kicks in. It also prevents parties from feeling that they are talking past each other without addressing some fundamental stumbling block.

2. How does this clause get you what you want?

A common misstep is to focus on the specific terms without clarifying the underlying desires. Asking “how” instead of “why” also avoids setting the other party on the defensive, because “why” can be interpreted as an attack on fundamental assumptions or beliefs.

It also tests the link between the other party’s stated objectives and preferred methods, because an insistence on clauses which do not serve a clear purpose may reveal some other hidden motivations. Revealing hidden interests late in the game is a serious waste of everyone’s time, and it might even be a red flag that the other side is not ready to be open and honest.

3. Is there a clear objective standard that we can use?

It’s common for parties to resort to “standard” language – lawyers would be familiar with words such as “reasonably” and “material”. Not everyone can take comfort in such vague, fact-specific terms, even if us lawyers have many cases and precedents to help define the boundaries of permissible behaviour, because it implies a secondary process of establishing such boundaries.

An alternative method of establishing an objective standard is to refer to a third party’s standards which are publicly accessible and not likely to change – and even if there were changes, it would be up to the parties to adopt a particular version. While this may mean more work to specifically import such external industrial standards, it helps to achieve consensus especially where these standards are already known to the parties (e.g. regulatory approval guidelines for medical devices).

If time is money (and the Chinese recognise that it’s usually a one-way conversion process) then I prefer to adopt a process that doesn’t require backtracking or surprises. Meeting each other in the middle is also not necessarily the optimal solution, so by digging up the fundamental interests as the first step, everyone get to cut to the chase and reach an agreement on the specifics faster.