Clients are often presented with lengthy one-sided contracts when consulting us for advice. At first glance, these contracts are often provided on a ‘take it or leave it’ basis.
Everything is negotiable
Everything is negotiable when you approach negotiations from a commercial basis, ensuring you take the time to understand the goals, risks and sensitivities of both parties. In our experience, there is minimal push back on strategic negotiations when you work towards addressing the concerns of the other party whilst bedding down your own objectives. Going into negotiations aggressively swinging the proverbial baseball bat rarely gets you straight to home base.
We understand where this thinking comes from—there’s a common belief that stronger protections automatically make for a stronger agreement. But after experiencing how deals play out in practice, we’ve found that contracts trying to secure every possible advantage upfront are often the ones that end up causing the most headaches down the track.
Instead of leading to better outcomes, the preparation of contracts in this way can create unnecessary friction. Negotiations drag on, costs increase, and everyone starts to lose sight of the real purpose of the deal. Sometimes, the relationship feels strained before the work even begins—and that’s never a good place to start.
Fairness is a legal requirement
There’s also a practical reality that’s hard to ignore; clauses that overreach don’t always produce the intended outcomes. With more focus on fairness and an increased level of scrutiny around unfair contract terms by the Courts, provisions that tip the balance too far are getting more attention—and not in a good way.
Strong contracting isn’t about trying to control all outcomes. It’s about being practical and commercially realistic; where everyone knows exactly what’s expected from the start, risk is insurable and allocated sensibly, and both parties understand how commercial value will be created. Factoring in that negotiations are innately personal interactions mean that your commercial outcomes need to also focus on the human impact of the agreement to be reached.
Keeping an eye on the exit
We always encourage clients to think about the end from the start; what happens when the commercial relationship comes to an end, either by agreement or due to a dispute? There’s often a lot of focus on getting the deal signed, but not enough attention to how things might wrap up if circumstances change. A well-structured contract should plan a smooth exit or parting of ways to avoid unnecessary disputes, last-minute grabs for value, or arguments over who gets to keep what when it all ends.
Our role is to help clients move through these decisions in a way that supports both the legal and commercial realities of their business. We avoid adding complexity for the sake of it, and focus on creating contractual outcomes that are workable, add value, and aligned with where clients and their businesses want to land.
Getting the deal done
Trying to “win” the contract at all costs is often more about flex and ego than good business. Shifting focus on delivering a deal that works for everyone involved is usually the fastest road to closing a successful deal. Effective contract negotiations should establish a high level of trust between the parties to facilitate good business. Building the bridge should be a collaborative process.
Contact us at hello@prismalegal.com.au to discover how we can help your business confidently navigate successful contractual negotiations so you can get on with what you do best.
