Negotiating a contract is the process of discussing the terms and conditions of a written agreement before deciding to proceed with it. This conversation usually involves two people such as an employer and an employee. Contracts or agreements are any written document that contains a set of legally binding terms and conditions such as:

  • Employment contracts
  • Non-compete agreements
  • Cost-plus contracts
  • Time and material contracts
  • Construction contracts
  • Nondisclosure agreements

During contract negotiation, you may discuss aspects of the contract and eventually agree to the terms. When negotiating terms such as a higher salary or more employee benefits, you must leverage the advantages with the company. 

These are 5 tips on how to negotiate a contract:


  1. Choose a Method for Negotiation

The way you negotiate depends on the particular type of contract that you are discussing. If it is a simple agreement, you can have the negotiation through email or phone call. However, if it is a serious negotiation, it must be done in person. Communicate with others to choose the correct method for negotiation.

When choosing a negotiation method, it is important to identify the style of negotiation that best suits the topic. Here are a few types to consider using:

  • Hard Negotiation

Determination to win at all costs. Oftentimes, this is positional and adversarial. 

  • Soft Negotiation

Negotiate a resolution that doesn’t harm the personal relationship but you might not receive what you requested for and may be taken advantage of. 

  • Principled Negotiation

Negotiate from a place of mutual gains where you can determine the key issues to negotiate and base the decision on fairness. This method is straightforward and promotes better collaboration between parties. 

2. Know Your Priorities

Start the negotiation by outlining your priorities or the initial terms you accept or decline. You must allow the other party to share why these terms are important. You may start finding out similar goals and values. This will make the rest of the negotiation process easier. Even if your ideas differ, you will start to understand each other’s perspectives which can help you develop a fair agreement. 

Related link: 7 Questions to Ask When Negotiating Salary

3. Discuss Risks and Liabilities

Consider any challenges or obstacles you may encounter throughout your contract. Create plans that both parties can follow in case something were to happen. For example, if you are planning to accept an offer from a high-risk industry, then it is practical to discuss who might be liable in case of an emergency. In addition, it is also beneficial to understand what might happen if one party is not able to fulfill their obligations. 

4. Discuss Clauses

Many contracts such as non-compete agreements, dispute resolution or confidentiality agreements contain clauses that outline the conditions under which the contract is legally enforceable. Clauses may also include additional terms that are not in the main section of the contract. It might be a good idea to hire an expert such as a lawyer to help you review the full terms including the clauses. This can help you review points you might otherwise miss or unseen. 

Additionally, think through and plan for future changes or any issues that might arise in the future. Planning for and discussing how to approach situations in advance can help minimise conflict later. 

5. Remain Reasonable

Remain polite throughout the negotiation process and use facts in your claims rather than relying on your emotions. Practice listening to their point of view with full attention and limiting distractions. Ask them some follow-up questions to learn more about their expectations and goals. 

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