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How to Navigate the Contract Negotiation Process

Two people around a computer trying to navigate the contract negotiation process

Contract negotiation is one of the most critical stages of the contract management lifecycle. However, it can be incredibly time-consuming and disorganized, particularly if you rely on email to negotiate contracts with your colleagues.

By employing new technologies, you can make contract negotiation smarter, less risky, and faster. Read on to learn about why it’s essential to get negotiation right, the stages and elements of contract negotiation, and typical challenges you encounter along the way. By the end of this article, you’ll also learn how Ironclad Editor can help you turn contract negotiations from barriers to enablers.

Stages and elements of contract negotiation

1. Prepare a draft. 

Before writing a finalized contract, you and the other party should prepare a draft contract together. Use a collaborative platform such as Google Docs or Ironclad to make communication easier. 

If you’re drafting a contract about a complex issue, breaking it into smaller pieces is a good idea. You can draft part of the outline while the other party drafts another part.

2. Develop an agenda. 

A well-drafted and carefully organized agenda will boost your ability to control and lead the negotiation.  As such, you need to do the following in your agenda:

  • Identify common interests and goals
  • Manage parties’ and stakeholders’ expectations
  • Determine and pinpoint priorities
  • Establish deadlines for meeting goals and milestones, if applicable
  • Outline the tactics you will use later down the line
  • Establish each team member’s roles and responsibilities 

Having an agenda will give both parties a thorough understanding of your top priorities, how they compare to less critical tasks, and when certain goals and milestones should be achieved.  Without an agenda,  it will be much harder for you and your team to move forward, particularly as you get closer to the bargaining stage.

Best practices for developing an agenda for negotiation include: 

  • Plan to negotiate the least important issues first. This will give you more time to think about the most important issues.
  • Place time limits on each item on your agenda. This will encourage parties and stakeholders to stay on track and make quicker decisions by limiting procrastination and overthinking.
  • Keep your agenda short and succinct. Although you should list out all relevant details, your agenda isn’t the place to list everything that’s up for consideration. It’s meant to give everyone a good idea of the key demands and areas of discussion and to give you a way to work together to reach your goals.
  • Use a real-time platform such as Ironclad or Google Docs to draft an agenda with the counterparty. Provide access to any relevant stakeholders so everyone knows what to expect.
  • Clearly lay out what each team member’s roles and responsibilities are. 
  • Be open to feedback and listen to what your team members say. Talk to each team member to understand what they’re comfortable with and assign roles as necessary.
  • Use headings and subheadings (i.e., Key Milestones, Key Dates, Parties’ Expectations, Top Priorities, Deadlines, etc.) to keep the agenda organized and moving.
  • Listen to what the counterparty and stakeholders have to say. If you’re not sure about their position or needs, ask questions so that you can have a clear idea of what they want and what issues they’re willing or unwilling to budge on. 

3. Consider everyone’s positions. 

Now that you have an agenda, it’s time to learn about the counterparty. 

The goal of this stage is to find out more about the other party’s goals and interests. By understanding the counterparty’s needs, pain points, and motives, you’ll know how to meet the counterparty’s interests while supporting your company’s needs. 

You should also ask questions about the counterparty’s stakeholders to find out what’s at stake for them and where they’re coming from.

4. Start bargaining.

This is where the rubber meets the road. The bargaining stage includes:

  • Presenting offers: talk about the payment terms, contract volume, and other key points of your contract. The counterparty will respond with their offers after you’ve presented yours.
  • Moving towards solutions: Talk to the counterparty about potential solutions to the points you don’t agree on.
  • Making concessions: There may be some points that can’t be resolved. To meet the counterparty’s interests while supporting your own needs, think about which issues you won’t budge on and where you have wiggle room. 
  • Summarizing the points made: Once you’ve come to an agreement, you need to summarize all of the points made during the negotiation. Drop all of the points down in an email to the counterparty and ask if they agree and if there’s anything they want to add. Remember: paper trails are your friend! If there are still some things that you and the counterparty don’t agree on, list them out in an email and set up another negotiation to address these points specifically.

5. Ensure everyone is on the same page.

In the final stage of the contract negotiation process, focus on ensuring mutual understanding between the parties. After you and the counterparty have concluded that you’re both on the same page, you can move on to the next stage of the contract management lifecycle— contract approval.

Challenges in contract negotiation

Contract negotiation is a very complex process with many moving parts. Oftentimes, company documents and contract drafts are scattered all over the place  — in hard drives, cloud storage, or filing cabinets. This lack of organization and centralization makes it hard for Legal to determine and pinpoint priorities, answer the counterparty’s questions, and access important contract metadata to create drafts efficiently and effectively.

Contract negotiation is even more difficult if you don’t use a real-time collaborative platform to communicate with the counterparty. For instance, you may accidentally email the counterparty an older version of a document, causing confusion as to which is the most recent version. If you’re dealing with more than one counterparty, you might forget to add a relevant counterparty to the email chain, and they don’t receive the document. As a result, many of your colleagues will fall behind on the contract negotiation process, leading to delays, miscommunication, and possible lawsuits.

That’s why you should use an advanced contract management solution like Ironclad. Equipped with a powerful DOCX native collaborative platform and Data Repository, Ironclad will help you communicate with stakeholders and counterparties in real-time, put contract metadata to work, keep everything transparent, and more.

Test your own contract process

How Ironclad can reduce the time of contract negotiation

With Ironclad, you will get transparency into the contract approval process so you can ensure consistency and compliance, which will make negotiating and approving contracts much easier.

Sleek, user-friendly, and packed with state-of-the-art features, Ironclad comes with an intuitive DOCX native collaborative platform that encourages collaboration—that is, working with all parties and stakeholders to ensure that everyone knows what they’ll be agreeing to. 

Say goodbye to waiting for hours for colleagues and stakeholders to get back to you—Ironclad lets you use @mentions and internal comments to loop in colleagues, so you can make concessions and work towards solutions in real-time. Like Google Docs, and unlike traditional contract management platforms, Ironclad also allows you to accept and reject tracked changes, comment, edit, and redline DOCX files, eliminating the need to email every change to your colleagues. 

Another standout Ironclad feature is the Data Repository. A centralized, searchable hub you can use to store all of your contracts, Ironclad’s Data Repository makes locating, and managing vital contract metadata simpler and faster than ever. With just a few clicks, you can find answers to any contract questions you or your counterparty have. This will make preparing drafts and agendas for the bargaining process much easier. You’ll also have access to intelligent alerts, cross-system integrations, and process automation, which will help you break down the barriers between Legal and the rest of your company to boost business agility and smart decision making.


If you’re looking for a contract management software that will help you master the contract negotiation process, consider Ironclad.

With powerful features like a DOCX native collaborative platform and a comprehensive Data Repository, Ironclad is a revolutionary tool for creating, negotiating, and executing contracts. By eliminating the need for emailing documents directly to stakeholders and counterparties, Ironclad will help you get the most out of the negotiation process.

Interested in seeing how Ironclad can make a difference in your company? Get started with digital contracting today. Test out our features and you’ll be able to see for yourself how Ironclad can reduce your contract processing time by 80%.

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