We form contracts every day. They don’t necessarily have to be in writing.
When you buy a loaf of bread, you offer to purchase it, the offer is accepted, you pay your money and acquire your loaf. Congratulations, you have successfully created a contract.
Of course no-one would normally put this sort of contract in writing. But what if you are a baker and want to buy 1,000 loaves a week from your supplier? These sorts of agreements can go badly wrong if you don’t have the terms of the contract written down.
These are some of the things to remember when you are negotiating:
Should your negotiations be confidential?
If you are negotiating about a sensitive matter – for example selling your business to a competitor, then ensure a confidentiality agreement is signed beforehand, and before giving away any sensitive information.
Are you sharing sensitive information?
Take legal advice before handing over any sensitive information, such as personal data about customers or employees. Does the other party need the information or are they are on a fishing expedition, to find out more about you?
Be careful what you say.
If you mislead the other party during negotiations then the contract may be undone and compensation may be payable.
Might the other party try to poach your employees or customers?
If the other party has access to your customers or employees, consider asking them to sign a non-poaching agreement. This stops them from approaching employees, customers or clients.
Take care before signing anything
If you are negotiating a complex deal, you may be asked to sign a summary of the terms before the main contract is agreed – always take legal advice before signing. Even if the agreement is not meant to be legally binding, it may create legal obligations, or affect your negotiating position.
Do not enter into a contract by mistake
You can enter a contract verbally, or over the phone or by email. Starting to perform aspects of the contract may also indicate acceptance of the last terms offered. To avoid this, always make clear you are still only negotiating, and mark all correspondence ‘subject to contract’.
Good fences make good neighbours, and good contracts can make good business. We are happy to advise on your contracts, and assist with negotiations.