How to Negotiate a Contract

“Everything is negotiable.” Well, maybe not everything, but a lot is. Knowing how to negotiate a contract effectively can help you secure better terms and avoid obligations that could create unnecessary risks for your business. Whether you’re finalizing an agreement in Kansas City, Boulder, or beyond, these nine tips will help you navigate your next contract negotiation with confidence.

But first, do you know How to Review a Contract?

1. Ask Questions

Understand why the other party is proposing their terms. Asking questions can help uncover their concerns and open the door to compromises that work for both sides.

2. Understand Your Bargaining Power

If you’re negotiating with a much larger company (think Google), you likely have less leverage. That doesn’t mean you should accept everything, but you should focus on the most important issues and pick your battles wisely.

3. Be Assertive, But Reasonable

Advocate for your interests, but don’t be difficult. Unreasonable demands can damage relationships and make the other party hesitant to work with you in the future—even if the contract is signed.

4. Add Missing Terms

If something is missing, add it. Don’t rush to sign just to close the deal. Overlooking key terms could create costly problems down the line.

5. Don’t Be Afraid to Strike Something

If a provision places too much risk on you or doesn’t make sense, request that it be removed. Be prepared to explain why, as the other party may push back.

6. Use Track Changes

If changes go beyond what can be covered in an email or phone call, use track changes in Microsoft Word or Google Docs to edit the contract. This makes negotiations more efficient by keeping all revisions clear and documented.

7. Consider Edits That Keeps Their Terms

If a term places excessive risk on your business, consider modifying it rather than removing it entirely. Here are a few examples:

Example: “NewCo represents and warrants that, to its knowledge, there are no lawsuits pending or threatened against it.”

Example: “NewCo shall use commercially reasonable efforts to keep the service up and running 100% of the time.”

8. Accept Legalese When Necessary

Legalese can be frustrating, but unless a term materially affects your rights or obligations, it’s usually best to leave it alone. Editing unnecessary legal wording just adds complexity and slows down negotiations. However, if your attorney is drafting the contract, you can ask them to minimize unnecessary legal jargon.

9. Accept Their Language When It’s Functionally the Same

You might prefer your wording, but if the other party’s language achieves the same result, it’s often best to accept it. Avoid unnecessary edits and only revise language when there’s a substantive reason to do so.

Final Thoughts

Contract negotiations don’t have to be adversarial. By focusing on what really matters, being prepared to compromise, and using clear communication, you can negotiate terms that protect your interests while keeping the deal on track.

*This article is general in nature and is not legal advice.