Be Wary Of These Red Flags When Negotiating A Contract

Contract negotiations involve two or more parties working towards a fair and equitable business arrangement. Whether it involves business partners, vendors, employees or customers, the sides likely differ on what fair and equitable means, so the parties must negotiate what they need, want and do not need or want in the agreement.

Contracts not strategically and knowledgeably created can have the opposite effect, causing costly and stressful disputes. This impacts profitability and increases the risk of a breach of contract lawsuit or other legal action.

Four signs of trouble

When going through the process, there may be signs that the other side is not bargaining in good faith. These red flags may be a signalthat it is better to step back or walk away from negotiating table:

1. The terms of the agreement are too generous.
2. The other party is unwilling to compromise or inflexible to others’ needs.
3. The terms involve auto-renewals, pre-negotiated price hikes or being locked in for too long.
4. The contract contains meaningless jargon, nonsensical details, or is too complicated.

Red flags can lead to disputes

It is wise to read a contract before signing it, but it can also be helpful to work with an attorney experienced in drafting and negotiating agreements. Their guidance can help ensure it is a fair deal that doesn’t harm the bottom line or unnecessarily risk a breach.