Why Is Contract Negotiation So Painful? Visualise this. You agree to buy a car from someone and the first thing you agree is the price – £10,000. Then you discuss the mileage. Oh no, you say, for that price, I expect the mileage to be 50,000. On the contrary, says the seller, for that price a mileage in excess of 100,000 is entirely justified. You then say for £10,000 the car must be a hybrid. ’Fraid not, says the seller, it’s a diesel. And so on. No-one buys cars like this. We recognise instinctively that this is putting the cart before the horse. The logical order is: 1.agree exactly what you are buying/selling (fuel, mileage, engine, etc), and then 2 agree the price and payment terms. The reason that contract negotiations are so painful is that we often put the cart before the horse. We agree a few key points – price, duration – and then we try to retrofit the rest of the terms. So, of course, it becomes a complicated, protracted process – there’s no simple way to agree all the other terms because there’s no natural right or wrong for any of the deal points. How do you avoid this impasse? You agree a set of key terms upfront. These have to include (otherwise, what’s the point?) all the points that people invariably argue about (limitations of liability being a prime example). Once these are agreed, you agree a corresponding price. It’s not as glamourous as agreeing a few deal points and lobbing it over the wall for someone else to close off, but it’s cheaper, faster and – heavens to betsy! – more rational.

is this actually feasible? In my experience with enterprise sales situations the purchase decision maker doesn't have the knowledge or the authority to discuss these points (liability, indemtification) and very often neither does the account exec.

There’s also the consultant mindset - understand the goal and commit to achieving (or helping) the goal. Deliverables are mostly irrelevant - the clearest, easiest car negotiation isn’t going to help if your goal is to get to China

@Gwen Shapira Yes, it's feasible. In fact, that's how most governments (certainly the UK government) and large companies do it. They set out the contract beforehand, and ask potential vendors to price to the contract. @Jeffrey Sherman Sorry, don't understand the car/China comparison.

It was a muddy metaphor - you can’t drive from the US to China. The clarity of the deal doesn’t matter, if you ultimately buy/sell the wrong tool for the job