Risk

I’m currently looking at buying a new software application. It’s not going to be a large purchase, but it’s relatively important (at least to me). The vendor, of course, tells me that because this isn’t a large deal for them, the contract template they’ve provided is non-negotiable.

Sound familiar?

What instantly becomes obvious, then, is the question of risk. Which, of course, is what most contract negotiations are really about anyways. In other words, are the terms of the agreement bad enough that it would make me not accept the contract and walk away from the application.

To make this assessment, I have to review the agreement in detail. I pass it along to counsel for their thoughts – especially since I was a bit biased as it’s a tool for me. Then I forward the redline to the vendor and tell them that while I understand their position, we’re unable to accept their template as written – that there are just some issues on our side that are too important to ignore.

The vendor, as expected, hemmed and hawed a bit… but eventually came back with a list of sections where they would not accept our changes. Some required a little internal discussion regarding risk – and after reminding everyone that the deal was pretty small… and limiting our total exposure from other perspectives, we felt the overall risk assessment was acceptable.

I called the vendor to let them know that we’d reached agreement. In the end we went from non-negotiable to partially-negotiated, just by doing a little work. The moral of the story is to never just give in. Assess your risk points, decide what is most important (your true needs), what’s nice to have (your wants)… and ask the other side to do the same.

The worst thing that happens is that you have a good risk assessment. The best thing is that you know your risk AND get your product, too!

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