Shrewd business owners know one simple truth about negotiating a business deal: if you aren’t watching your own back, no one is; especially not the other guy. Even if the other side is saying all the right things, you owe it to yourself to make sure the deal goes the way you need it to go.
Speaking of “all the right things,” here are five things you might hear from the other guy that sound innocent enough, but should raise the alarm:
1. You probably don’t even need a lawyer.
Nobody ever really needs a lawyer, pro se (get it?). But you have to ask yourself, does the other guy have a lawyer? Do you want to bet that he doesn’t?
Know this: the other side doesn’t have to tell if they have an attorney working behind the scenes. If there is an attorney working from the wings, that lawyer is not looking out for your interests. Furthermore, if the other side is producing all of the transaction documents, it is almost guaranteed that those documents are written against your interests. You don’t necessarily need to bring a lawyer to every business meeting, but it certainly doesn’t hurt to have a lawyer eyeball something to make sure you aren’t being blindsided by an outrageous term.
2. That contract provision isn’t applicable here, so there is no harm in leaving it in.
Courts assume if it is in the contract, it was intended to be there and was intended to apply. Additionally, if your relationship goes sour, each side is going to pour over the contract looking for anything they can use to stick it to the other side. Even if you both agreed that the “late fee” provision wasn’t applicable, you can bet your business that the other side is going to try to sue you for late fees. Worst of all, they will have a pretty good case.
Bottom line: if it isn’t part of your agreement with the other side, it shouldn’t be in the contract.
3. We don’t mess with written contracts.
If you are in business in America, you do deal with written contracts. As the saying goes, a verbal contract isn’t worth the paper it is written on. A written contract doesn’t need to include much, but it should at least include the absolutely material terms: what does each side get, when do they get it, and what happens if they don’t. Remember: the more you have in writing, the less you have to prove down the road.
4. We don’t accept edits to our contract because we spent a lot of money to get it drafted.
This is common in the real estate leasing industry. This is their way of telling you that this isn’t a negotiation, this is a take-it-or-leave-it offer.
Before you sign that triple-net lease that gives the landlord the power to hit the kill switch on your business, have a lawyer look at it. If they want to do the deal, chances are, they will budge on the more onerous provisions.
5. We can work out that detail after we sign the contract.
No. The contract is where the details get worked out. Naturally, there will be a few items that cannot be finalized until a later date. In that case, the contract should at least spell out the process for finalizing such items. This also comes up in the real estate leasing context. If the landlord is supposed to build out the leased space, the details and time constraints of that build out need to be in the lease. You should assume that if it isn’t in the contract, it isn’t going to happen.