ADVOCATE S CONTRACT NEGOTIATION  January, 2014  Sakshi Bawa, Attorney C-17, II Floor, LSC I Paschimi Marg Vasant Vihar New Delhi India E: T:

ADVOCATES WHAT IS A CONTRACT PROPOSAL PROMISE CONSIDERATION AGREEMENT LEGALLY ENFORCEABLE LEGALLY NOT ENFORCEABLE CONTRACT VOIDABLE AGREEMENT VOID AGREEMENT

ADVOCATES Section 2 (h) of Indian contract Act, 1872 defines an agreement : “Every promise and every set of promises, forming the consideration for each other, is an agreement.” Section 2 (h) of Indian contract Act,, 1872 defines a contract: “An agreement enforceable by law is a contract.” WHAT IS A CONTRACT Contd

ADVOCATES “Negotiation often requires stepping into the shoes of the other." Contract Negotiation: Process of give and take between two or more parties to reach an agreement. The Business Side vs. the Legal Side of Negotiations Contract negotiations have two distinct stages: negotiation of the basic business terms followed by negotiation of the legal terms. The legal terms are not divorced from the commercial or business objectives. It is very important for the legal team to understand such objectives so that the legal provisions are properly dove tailed. Points for specific attention; - Potential liability of the parties and cap on such liability -How future activities of parties may be affected by the contract -Does the contract provide for change in law, adverse economic situation and indicators for what may be construed as such -Governing Law and Dispute Resolution CONTRACT NEGOTIATION

ADVOCATES Bargaining Position: The "Take It or Leave It" Situation One key to the outcome of contract negotiation is the relative bargaining positions of the parties. Standard or one sided contracts may contain ‘unfair’ or ‘anti-competitive’ terms and should be specifically examined in terms of the Competition Act, CONTRACT NEGOTIATION Contd

ADVOCATES 6 Components of Contract Negotiation  Solicitation  Bid or Proposal  Buyer’s source selection process  Seller's past performance  Previous contracts  Competitor Profile Business Ethics/ Standards of Conduct Guidelines  Market and Industry practices  Oral presentations  Highly skilled contract negotiators  Legal Review  Business Case Approval  Contract Negotiation Formation Process o Plan negotiations o Conduct negotiations o Document the negotiation and form the Contract  Contract or Walk away Reference Text: Contract Negotiations, by Gregory A. Garrett, CCH, Inc. (2005) Tools & Techniques Key Inputs Tools & Techniques Desired Outputs CONTRACT NEGOTIATION Contd

ADVOCATES Three outcomes are possible when negotiating: Win-win (both parties win). Win-lose (one party wins, the other loses). Inefficient but equitable (all items shared equally). CONTRACT NEGOTIATION Contd

ADVOCATES In conclusion; i.There is no golden rule of ‘Contract Negotiation’ ii.It is important to be aware of the position of the counterparty- strengths and weaknesses iii.Legal negotiations should be dove tailed with business /commercial negotiations iv.Sweet deals may end with bitter pills – thus, attempt for win- win positions CONTRACT NEGOTIATION Contd

ADVOCATES In lighter vein