contract negotiation

document comparisonIt’s important not to lose control when you’re negotiating a contract. I’m not talking about losing your cool, but staying on top of contract versions. Here’s an example from my professional youth:

I was negotiating a contract for a large company during my first or second year of practice. There was a lot of back and forth between the lawyer on the other side and me with contract drafts being sent both ways over a period of weeks. Suddenly, I realized that I’d completely lost track of which draft was current and that I’d made revisions to the wrong draft some point along the way, creating a confusing mash-up of old, intermediate, and new contract language. I had to call opposing counsel for help — a bit embarrassing, to be sure.

Documents, documents, everywhere

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Legal triage is an everyday part of business. It’s rarely anything so dramatic as the action you see on TV hospital dramas, but businesses constantly have to decide which legal issues are critical, which are important, and which can be put off for a while — or even ignored altogether.

I’ve often advised people to give important contracts special attention. That might mean a full-blown negotiation with rooms full of lawyers and business negotiators, bland pastries, and tubs of Red Bull. But sometimes it’s sufficient to have an executive higher on the corporate org chart read the contract closely and consider the pros and cons of its terms.

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In his lesser-known recent opinion in which ostriches make an appearance, Judge Richard Posner of the U.S. Seventh Circuit Court of Appeals considered whether a memorandum of understanding and a letter of intent formed binding contracts. As you might have guessed from this post’s title—which is a quote from the opinion—the answer was no.

(In his better-known ostrich opinion, Judge Posner benchslapped one of the lawyers arguing before the court for disregarding precedent that was detrimental to his case. The opinion, in which Judge Posner compares the lawyer to an ostrich with his head in the sand, is complete with pictures. See this post at Above the Law for the picture of man in suit with head in sand.) [click to continue…]

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Every once in a while I read a court’s opinion and want to know the back story. That’s how I feel about last month’s Seventh Circuit decision in Digitech Computer v. Trans-Care.

Here’s a short version of the business story from the Southern District of Indiana’s three separate opinions and the Seventh Circuit’s opinion. Trans-Care personnel met representatives of Digitech at a trade show. Wanting to win Trans-Care’s business away from a competitor, Digitech later persuaded Trans-Care to negotiate for the purchase of Digitech’s software by offering a 90-day “satisfaction guarantee,” which was unusual for the software company. [click to continue…]

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In this recent post I discussed some habits that businesses can adopt to increase their contract hygiene. These practices, which can improve a business’s health, are inexpensive and effective, yet often neglected.

To recap, the first three habits are:

  1. Negotiate before you sign.
  2. Give important contracts special attention.
  3. Don’t sign the other side’s boilerplate terms and conditions. [click to continue…]
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“As few as 50% of restaurant workers wash their hands.” I was introduced to that disturbing stat during a presentation about some sort of high-tech handwashing tracking device that could monitor which employees were washing their hands. I’m not sure whether it was mounted to the sink or the soap dispenser or exactly how it worked—I was a bit distracted by the thought that the folks who worked at my favorite restaurants might be on the wrong half of the curve.

This had an oddly familiar ring to it. A simple practice, inexpensive, effective. Yet often neglected. Just like the contracting practices of a lot of businesses. [click to continue…]

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