Smart Contract Negotiation: Tips from the Experts

Introduction

Every business relies on contracts. Whether you're buying goods, hiring services, or entering a partnership, you'll negotiate. Getting good terms protects your interests. Many people settle for bad deals because they don't know how to negotiate effectively.

1. Prepare Before You Sit Down

Know what you want and what you're willing to accept. Research what similar agreements look like. Understand the other side's position and needs. The more prepared you are, the stronger your negotiating position.

Write down your top 3 priorities. Know your walk-away point. If they won't agree to minimum terms, you need to be ready to walk away—and mean it.

2. Start High (If You're Asking for Concessions)

If you're asking for better payment terms, lower prices, or more favorable conditions, start with an aggressive ask. You'll likely negotiate down from there. If you start near your bottom line, you have nowhere to go.

But be reasonable. A completely unreasonable opening position damages your credibility.

3. Listen More Than You Talk

Many negotiators talk too much trying to convince the other side. Asking questions and listening tells you what matters to them. You might find areas where their priorities and yours don't conflict—those are areas for compromise.

Ask: "What's most important to you in this deal?" "What concerns do you have?" Listen to the answers without immediately responding.

4. Find Creative Solutions

Don't get stuck on one way to solve the problem. If price is an issue, maybe you can pay more upfront for a discount, or spread payments over time. If timeline is tight, maybe quality can be slightly less stringent.

Creative solutions often benefit both sides more than just splitting the difference.

5. Separate the People from the Problem

This is critical: You can negotiate hard on terms while staying friendly. Don't make it personal. Don't assume the other side is trying to cheat you. Treat them with respect.

You might do business with these people again. Even if you don't, bad relationships create problems (they drag negotiations out, refuse to cooperate, or cause trouble later).

6. Get Everything in Writing

Verbal agreements are worth the paper they're printed on. Everything needs to be in the contract. Don't rely on "we'll work it out" or "we understand each other."

Months later, people's memories differ. A written contract prevents misunderstandings and gives you recourse if someone breaches.

7. Watch for Red Flags in Contracts

Look for language that puts all the risk on you. Watch for:

• Unlimited liability clauses
• Indemnification that puts you at risk for third-party claims
• Vague termination clauses
• One-sided amendment rights
• Excessive secrecy or non-compete obligations

Don't blindly accept the other side's contract template. These are drafted to favor them.

8. Know Your Limits

Some terms are absolute no-gos. If a supplier demands you indemnify them for their own negligence, that's unreasonable and you shouldn't agree. If a customer wants 90-day payment terms when you need cash flow, that doesn't work.

Know your limits before negotiating. Once you state a limit, stick to it unless they offer something valuable in return.