How to Understand Contract Terms

Video Transcript

Hello, my name is Barry Payne, on behalf of Expert Village. You can use testing understanding as a mirror to reflect back the other party's words in a different light. What does that mean? You can say, let me ask you, are you saying that you see no merit whatsoever in what we're suggesting? That's difficult to answer. If they say, oh yes, I see its value, then you can say, oh fine, I'm glad that it's valuable to you. If you say no it's a bit blunt, and it risks them causing more conflict then they may be ready to have. So testing understanding can be quite successful, particularly in looking at the weak parts of their position. "So when you say this, you're sure you mean this as well"? Summarizing: you can summarize the concessions you've made. You can summarize the options you've put forward that they've refused. You can summarize the illogical aspects of the arguments that they've put forward, so summarizing can be quite useful. There's one reason above every other that testing understanding is useful; the negotiation was between Phillips of Holland and IBM. What had happened was that Phillips had said to all of their organizations around the world, "stop, you're not buying any more IT equipment or office equipment, we're going to buy it centrally." So of course IBM wasn't very happy about that. They knew that they might have a few problems getting the price. The meeting was in London. We'd previously had a meeting over in Holland. I thought, well, I think it's there, I think everything is in place. The guy who was representing IBM said, "just a minute; there's one point I'm not clear about." He said, "are you sure that your office in Rome will open by the end of December." They said, "sure it's opening in the next few months, or it could be February or March." He said, "I need to know for sure, is it going to be opening by the end of this year, or not? They said, "we can't guarantee that." So he said, "gentlemen, I'm afraid that I'll have to remove those numbers that you're looking at." Well, I thought he'd blown it. A minor point like that on a major negotiation. I sent the research papers back to Sheffield, where my researcher was doing the analysis. I rang her up and I said Linda, the one that I was observing, was that one of the successful group, or one of the average?. Because we didn't know, in case it biased our observations. She said, "yeah, successful." I said, well I can't understand what he did. They're going to come back tomorrow to finish this negotiation. It wasn't until sometime afterwards that I realized, most of us when we negotiate want to close the deal. Skilled negotiators are more motivated about opening a relationship which will endure. He saw something loose in that contract which would serve as a hazard to implementation, and he wasn't prepared to leave it there. They came back the next day, and within an hour it was all solved.

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