let’s be clear – negotiating contracts



Howls of outrage in the @techlawnz office generally mean one thing – the other side to a negotiation has not properly marked up the contract.

Of course, we follow the well-worn protocol of, with each turn of the contract, accepting all of the other side’s mark-ups, and marking up all of our edits from there.  US firms usually provide a clean version of the contract along with a compare in pdf.

Why take this approach?  Because it ensures that the other side can clearly identify and consider all of your changes.

Should you care if the other side is too lazy to double check that it has picked up all of your changes?

Well, making changes to a document without bringing them to the other side’s attention can tend to sour a newly formed relationship.  But, worse still, you run the risk of breaching the Fair Trading Act.  That Act prohibits misleading or deceptive conduct in trade.  And if you fall foul of that Act, the remedies against you are wide-ranging, including a declaration that the relevant contract is void and/or an order varying the contract, requiring the refund of money, or requiring the payment of damages.

What’s brought this to mind for us?  We’ve just reviewed a US contract that requires each party to confirm that it has made no change that hasn’t been redlined or expressly brought to the other party’s attention.  And, if a party has, the other party can terminate the contract.

We like it so much, we’re thinking about including it in our templates.

But as a general rule, contract negotiations always go more smoothly if everyone is transparent about the changes they are making.  And, you still end up friends after the contract is signed.

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