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Knowing the Counterparty in Contract Negotiations

Negotiators have much to consider when preparing for contract negotiations. The two main questions negotiators consider are what do they want from the agreement and what is their best alternative to a negotiated agreement. Since there are at least two sides to every agreement, successful negotiators also consider these questions as they relate to the counterparty. 

Understanding the interests and objectives of the counterparty is an essential part of negotiation strategy. When negotiators understand the other party, they can address and even anticipate the objections the counterparty may raise and have mutually beneficial solutions ready.

Understanding the Counterparty

The first step to understanding the other party in a negotiation is to discern the underlying goals, needs, and concerns they hope to satisfy through the agreement. Understanding the counterparty's underlying interests allows negotiators to determine the value of the agreement for the other party, find mutually beneficial solutions, discover overlooked sources of value in the agreement, and avoid making proposals that will likely be rejected. 

The second step is to determine the other party's BATNA — best alternative to a negotiated agreement. What are the best options that the counterparty has for meeting their goals if negotiations reach an impasse? By understanding the choices available to the other party, negotiators can identify obstacles to the agreement, recognize when the other party is bluffing or posturing, tailor arguments to make other options look less attractive, and limit the other party's ability to pursue their alternatives.

Finally, negotiators must know the counterparty's level of authority, which simply refers to how much power the counterparty negotiators have to commit to a deal and at what point do they have to consult internally for approval. Knowing the level of authority helps negotiators avoid falling prey to commitment-related tactics, identify and get access to key decision-makers, determine if, when, and how negotiations should escalate, prepare presentation materials for internal authorities, and develop a negotiation timeline to assess their progress.

Communicating with the Counterparty

Negotiation is essentially communication that is used to persuade another party of the benefits of an agreement, Negotiators use specific verbal and nonverbal communication styles to get their point across. However, a good business relationship requires communication that is open about its interests and concerns and responsive to the interests and concerns of the other party. Establishing good communication during negotiations promotes the long-term success of the business relationship.

Negotiators communicate through a variety of channels including written materials, presentation materials, and sales contracts. The sales contract relates the terms of the proposed agreement and is the blueprint through which the agreement is fulfilled. 

Sales contracts should be aesthetically pleasing and exhaustively detailed to convince the other party of its benefits. For the most professional-looking sales contracts and presentation materials, be sure to use a JPG to PDF converter.

Mutually Beneficial Solutions

Understanding the interests, objectives, and concerns of the counterparty allows negotiators to identify mutually beneficial solutions. Mutually beneficial solutions add value to the agreement for both parties.

A chamber of commerce can provide more information about sales contracts and negotiations as well as networking opportunities, business directories, knowledge of the local community, and other support. 

Join your local chamber of commerce today.


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