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Final Paper

Scott Heraty

Negotiations as a Process

Siena Heights University

April 25, 2023

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The intent of this paper is to inform and explain the process and procedure of forming a

contract between two or more parties. The need for a binding contract is to clearly state terms

and conditions to avoid misunderstanding and conflict between parties in the future. Negotiations

related to said contracts have many nuances and legal complications. Contracts can be difficult to

agree upon no matter the number of issues needed to agree upon. In further text, this paper will

serve to define what a contract is, its purposes, legal implications, and tactics used to keep a

negotiation process positive and fruitful. It will also discuss important information related to

pitfalls during the negotiations of contracts. Negotiations of a contract can assist in building

relationships and agreements to solidify them. The process can be necessary but complicated.

What is a Contract?

A contract is simply a record of the outlined terms agreed upon by two or more parties. A

contract is a formal agreement that spells out the intent and terms of understanding developed

through a negotiation process. A contract is written to clearly state the understanding reached

between parties (Pinet & Sander, 2013). A contract is a legally binding agreement between two

or more parties that outlines their respective obligations and rights. Contracts typically include

information such as the names of the parties involved. These can be individuals or the names of

companies or organizations. The scope of the agreement, the duration of the agreement, and any

other relevant information that is necessary to clarify the terms of the agreement are also usually

included. The language, once signed, is to be legally binding and able to be enforced by law

(Lloyd, 2012). Contracts can be used in many different settings such as leasing a car or home,
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employment, healthcare terms, legal agreements, etc. A contract is not formed out of a lack of

trust but a need for a clear understanding of all responsibilities. Differences in opinions and

interests cause the need to negotiate an agreement that makes the stipulations enforceable and

very clear to all. A well-written contract sets concrete understanding by all involved to the

agreed-upon terms of a compromise made in negotiation. These agreed-upon terms solidify

accountability by all sides after the completion of the negotiation. To understand what needs to

be included in said contract, a negotiation process needs to take place to come to an agreement

between two or more parties.

Negotiation Process

The process of negotiating a contract is intended to allow for communication and

compromise between different parties with the goal of reaching an agreement. This negotiation

could be a result of a new relationship or further defining an existing relationship (Battigalli &

Maggi, 2002). Contracts between parties new to each other can have many terms that need to be

agreed upon. Negotiations stemming from existing business partners can have fewer items

needed for discussion but that does not mean they are potentially less complicated (Lloyd, 2012).

Each group involved will have set goals and aspirations they want to see in the final contract. In

addition, each party must enter negotiations with good faith. This means that each party must be

able to follow through with the terms they agree to. Also, good faith negotiations mean that each

side should be willing and open to compromise to meet together on terms of agreement (Herman,

1991). When one party is not negotiating in good faith, a breach of trust can occur and have

detrimental effects on the process. Compromise and communication on behalf of all involved

help make negotiations effective. Note-taking can be a helpful tool to enhance communication
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and accountability (Lloyd, 2012). All parties are encouraged to take detailed notes during a

negotiation process. These notes are used to accurately understand and keep track of the items

discussed and terms agreed upon. Notetaking allows everyone involved to document the intent of

the compromises agreed upon and used as a reference later after the contract is written (Pinet &

Sander, 2013). The process of negotiating a contract can have a cost in itself. The costly process

of coming to terms can cause incomplete language to be included in the final contract. When

there is incomplete language it allows opportunity for deviations in environments not specifically

covered in the writing. Contingencies also need to be negotiated to avoid these examples of grey

areas. Contingencies are included to spell out appropriate actions to enact in the instance that a

specific example is not listed in the contract (Battigalli & Maggi, 2002). An example of

contingencies is located in a contract between a firefighters’ union and the municipality they

work for. The contract explains every agreed responsibility of each rank. In addition, it is

understood that in an emergency some individuals will be asked to work outside their rank until

the emergency is mitigated. The contract gives the power to the administration to assign

individuals as they see fit during such emergencies (Heraty, et al., 2021). The language needs to

be written by a competent contract writer.

Contract Writing

An individual or group responsible for writing a contract has a difficult job. All language

combined into a contract should be a summation of the terms and intent of all parties.

Negotiation notes and language agreed upon has to be clearly referenced in a way that does not

leave room for ambiguity (Lloyd, 2012). A clear understanding and description of the terms

agreed upon are one of the top priorities for those who are writing a contract. With that said, it is
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a very important job to accurately draft a contract including all finalized terms. Contracts can be

written by individual writers, legal counsel, or electronic contract writing systems (Lloyd, 2012).

Due to the increased use and its propensity to appear in day-to-day life, technology in contract

writing is on the rise (Nash, 2019/2020). Due to the future legal implications related to a

contract, lawyers are often vital assets when drafting a contract. Intent and wording are

complicated when properly phrasing contract language (Herman, 1991). The use of a contract

lawyer can add clarity and lessen possibly subjective interpretations of language in the future.

Research shows that when a clear contract offers unrefutably clear language when covering a

subject, it in itself will deter any party from filing a legal suit against the other (Herman, 1991).

Another helpful step in the contract process is the review by all parties after it is drafted.

Contract Review

When a contract is completed, it should be reviewed by all parties before signing (Nash,

2019/2020). The review process can be lengthy depending on how many subjects and their

importance make up the contract that was negotiated. Technology can be used in this step to

review the new contract or compare it to previous contracts (Sweet & Paes, 2022). When

reviewing a drafted contract, everyone involved should inspect every word that is written

regardless of the length of the section. Fatigue and complacency can lead individuals to cut

corners in the review process. This can cause missed language and further litigation down the

road by either party (Anonymous, 2004). During this period all negotiation notes taken should be

referenced and reviewed compared to the contract draft. Intent and wording can be deemed

correct or incomplete depending on one’s view of the issue and how it is written.

Communication on both sides is essential during the review process. Issues with wording and
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desired phrases can essentially be small instances of negotiating as well. A simple change of a

word from “and” to “or” can have legal complications down the line (Herman, 1991). Each party

should review all amendments added to the contract and approve the context of them. The

process of amendments and amending those amendments can cause confusion and

disagreements. It is important to stay on task when discussing all the nuanced language

negotiated by both sides. A though review of all the different changes in language can be tedious

but necessary. Assumptions that the text is all correct can cause problems for all parties later

(Pinet & Sander, 2013). There are times when negotiations of a contract fail and an outside party

needs to be brought in to mend fences and reach an agreement on terms.

Alternative Dispute Resolutions

Mediation and arbitration can be a useful tool to bring a contract negotiation to a close.

They may be needed during negotiation or at the end when issues are found in a review that all

parties cannot agree on. A mediator can come in as a neutral third party to help bring a contract

to a close. Mediators can be sounding boards or neutral negotiators to aid in compromises

between parties. At times negotiations break down due to poor communication or hurt feelings.

Mediation can help mend those relationships and get the contract to the finish line (Ignat, 2013).

Another alternative dispute resolution is using the arbitration process. Arbitration is a method of

resolving disputes outside of the traditional court system, where parties submit their dispute to

one or more arbitrators who then make a binding decision (Pinet & Sander, 2013). Arbitration

can be used for a wide range of disputes, including commercial, labor, and consumer disputes.

Arbitration is often used as an alternative to litigation because it is generally faster, less formal,

and less expensive than going to court. Additionally, arbitration can provide more privacy and
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confidentiality than a court proceeding. The arbitrator's decision is typically final and binding,

meaning that the parties must accept the decision. The specific rules and procedures of

arbitration may vary depending on the governing law and the arbitration agreement between the

parties (Farber, 1980). These are examples of two processes to complete a negotiation and result

in a contract finalized by all parties involved.

Conclusion

In conclusion, contracts and the process of negotiating them have many hurdles that need to be

overcome. Even with those hurdles, the end goal is to agree to terms that add clarity and

structure to an agreement between two or more parties. Whether a contract is completed by a

positive negotiation process or an arbitrator’s pen, the terms finalized in a contract should

remove questions about what each stakeholder is responsible for and what is expected from

them. The intent of this paper was to elaborate on the process of negotiating and developing a

contract. Contracts are an essential aspect of business and personal relationships. They provide a

framework for parties to agree on terms and conditions, and they help to establish clear

expectations and obligations. By understanding the key elements of contracts, one can better

navigate contract negotiations and ensure that their agreements are legally binding and

enforceable. While contracts can be complex, they are an essential tool for ensuring that parties

can trust each other and work together effectively. Understanding the basics of contracts is

crucial for anyone who wishes to engage in business or personal relationships that involve

agreements.
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References

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Farber, H. S. (1980, December). An analysis of final-offer arbitration. The Journal of Conflict

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