In any business, especially in healthcare, contracts play a pivotal role. These documents protect both the company and the client from making costly mistakes and give both parties a guideline to follow when faced with an issue. As such, having a comprehensive understanding of how contract negotiation works is necessary to prevent costly mistakes and ensure that all legal issues are tackled swiftly and efficiently.
As mentioned above, contract negotiation skills can be applied across virtually any industry, but they’re particularly useful for medical professionals because they create rules which limit litigation if something goes wrong. For example, someone who has just undergone surgery performed by you may sue you after discovering that another surgeon could have done it faster or cheaper than you did. However, if you signed a contract before performing that individual’s surgery, then the contract clearly states that you will be paid a specific amount for your services and, as such, they cannot sue you because of it.
Contract negotiation is an incredibly important part of any business and determines if a company can continue to operate or shuts its doors. If there was no legal recourse for either party in a contract, then businesses would constantly be opening and closing their doors every single time something went wrong between two individuals; this is counterproductive to growing any business and prevents companies from creating sustainable infrastructures which allow them to flourish over long periods of time.
Part One: What is Contract Negotiation?
The term “contract negotiation” refers to both drafting new contracts and resolving disputes within existing agreements. A “contract” is the same as a “business agreement.” It too often happens that parties to an agreement can’t resolve, or don’t know how to resolve, disputes. For example, it’s common for people to sign contracts without knowing what their rights and obligations are under those terms.
Before one signs a contract, they should have a well-written legal document which clearly states all of the responsibilities and expectations required from each party involved in an agreement. Negotiation also occurs when problems arise with existing contracts or companies want changes to be made after they’ve been signed. While there may not be an obvious solution as soon as a problem arises, both sides should enter into negotiations open-mindedly so that the issues can be resolved as smoothly as possible.
Part Two: The Four Stages of Contract Negotiation
Before diving into the four stages of contract negotiation, it would be helpful to discuss what each party’s role is within negations. There are two main parties involved in negotiations; they are known as “the buyer” and “the seller.” These terms merely refer to which individual or business wants something from the other because negotiating can occur between anyone with conflicting interests. For example, you might want higher pay from your job but your employer wants you to increase productivity before giving you a raise. In this case, you’re acting as a buyer and your boss is the seller.
Now that we understand how these roles work, let’s take a look at the stages. The first stage is called “the opening.” During this time, each party attempts to get an overall feel of the negotiation and begins amassing information about what the other side wants.
Stage two is known as “compromise,” which occurs when both parties try settling on a middle ground that benefits both sides equally. This may sound like an easy step in negotiations, but it can easily be muddled if one or more parties are not willing to compromise on some issues. For example, imagine you’re buying a house and its previous owner has given you two choices; they’ll either sell it to you for $200,000 or $250,000. Asking the seller to lower their price will work because it’s within their negotiating range, but not offering a counteroffer would mean that you’re not willing to negotiate with them and the seller may drop out of negotiations.
Once both sides have reached an agreement, then negotiations can move into stage three: “signing.” This is also known as when final contracts are drawn up and documents are signed by both parties. Before signing any contracts or agreements, it’s important to run through them very carefully so that no mistakes are made during this crucial step.
Finally, in the fourth and final stage of contract negotiation, we arrive at “the closing.” To close a contract means that it is finalized and no changes can be made to the deal before coming into effect; essentially meaning that once everyone has signed on the dotted line, there’s no backing out.
Part Three: Tips for Successful Contract Negotiation
The following list contains some tactics and strategies that can increase your chances of successfully entering and finishing a contract negotiation:
- Don’t rush into the process – take time to research and understand what you’re bargaining for before even starting negotiations with anyone. This will help keep everything organized and prevent any unnecessary mistakes from being made; it will also give you enough time to decide if you want or don’t want to complete an agreement.
- When first meeting someone, do not discuss any important details about yourself or the business until trust has been built between one another. Otherwise this information could be used against you later on during negotiations.
- If you’re unable to reach a deal with someone, do not force the issue. It’s better to walk away from an agreement then being stuck in a bad contract that will inevitably hurt your interests. Remember this – always keep your long-term goal in mind and don’t lose sight of it during negotiations.
Throughout every stage, it is crucial that negotiators remember who they represent and what their goals are as well as those for their business. This way, there should be no confusion about what needs to be done once negotiations conclude on terms both parties can accept.