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Nine Contract Negotiation Tips for Small Businesses

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When a small business reviews a client agreement provided by their client, it is important to ask for changes if the contract contains errors or simply doesn’t meet expectations. The nine tips below will help you to negotiate the details.

But remember, whenever possible, you should use your own client agreement template and our digital contract platform can help. Create your first contract for free »

The Nine Tips:

#1 – Ask Questions. Get an understanding of why the other party is proposing their terms.

#2 – Understand Your Bargaining Power. If you are small and they are big (think, Google), you have less bargaining power. That doesn’t mean you should agree to everything, but you should pick your battles wisely.

#3 – Be Assertive, But Reasonable. Stand up for yourself, but remember that no one wants to work with you if you are unreasonable. (And keep in mind that if you are unreasonable in a contract negotiation, the other party will remember this after they sign, if they sign at all.)

#4 – Add Missing Terms. If something is missing, add it! Don’t leave things out simply because you want to get the contract signed. If you do, you may regret it later.

#5 – Don’t Be Afraid to Strike Something. If you cannot agree to a provision, strike it. However, make sure you have a substantive reason to strike it in case the other side pushes back.

#6 – Use a Redline. If there are more changes than can be covered in a simple email or phone call, redline the agreement using track changes in Microsoft Word or Google Docs.

#7 – Consider Redline that Keeps Their Terms. If the other side includes a term that places too much risk on your business, consider how you can slightly modify the term to reduce your risk but address their concern. Here are a couple examples:

  • “NewCo shall keep the service up and running 100% of the time” can be changed to “NewCo shall use its commercially  reasonable efforts to keep the service up and running 100% of the time.”
  • “NewCo shall not use subcontractors without Client’s prior written consent” can be changed to “NewCo shall not use subcontractors without Client’s prior written consent, which shall not be unreasonably withheld or delayed.”

#8 – Accept Legalese. Ok, this one is hard to say, but don’t redline legalese unless there is a substantive reason to do so. It just adds more redline and causes more work. (But if your lawyer is drafting the first draft, don’t be afraid to tell them not to use legalese!)

#9 – Accept Their Language. You probably prefer your language. But unless there is a substantive reason to strike their language and paste in yours, just accept their language and redline as necessary.

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Related Guides

There’s so much more to learn! Here are a few related guides you should read:

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